IPF’s earnings drop by a third, but the balance sheet is stronger
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CAPE TOWN - THE INVESTEC Property Fund’s (IPF’s) distributable earnings fell 33.9 percent to 46.87 cents per share, but its balance sheet had been strengthened and liquidity preserved in the six months to October 31.
Loan-to-value reduced to 43.8 percent at September 30, from 47.5 percent in March, and had reduced even further to 39.8 percent after a refinancing of Pan European Logistics (PEL). Cash and other facilities stood at R1.4 billion.
Joint- chief executive Andrew Wooler said they had continued to focus on the strategic objectives of hands-on operation and active balance sheet management.
“We have much enhanced the fund’s financial position, having completed our de-gearing flight path within the planned time frame during some of the most tenuous market conditions ever experienced,” he said.
The de-gearing included disposal of five South African assets, the stake in the Investec Australia Property Fund, and moving the Belgian assets into the Pan-European logistics platform, together with the debt refinancing of the platform at the end of October.
In addition, management remained focused on cash flow management and liquidity preservation. The de-gearing had normalised loan-to-value at 38.8 percent from 43.8 percent.
The interim dividend was deferred to around the new year until there was more certainty about the further lockdowns in Europe.
Although the directors said they were “confident” of the performance of the European portfolio, given its resilience and ability to retain collection rates at 98 percent through the first lockdown, the board deemed it “prudent” to maintain a cautious approach.
The dividend payout ratio had been reduced to between 90 and 95 percent going forward, which aligned the IPF’s policy with international market practice.
A top-up dividend of 29.82c per share was declared for the six months ended March 31, which would bring the payout ratio for the 2020 financial year to 95 percent.
The IPF’s South African portfolio was materially affected in the interim period by the lockdown and its impact on retailers.
Footfalls at the retail centres were up 100 percent since the lockdown, but still down 15 percent in September year on year, although average spend was up 15 percent year on year.
The European logistics platform performed in line with expectations, despite Covid-19, and reported a 14.8 percent like-for-like growth in distributable earnings.
The disposal of properties in South Africa realised R800m, while the sale of the Investec Australia Property Fund realised R700 million. Some € 40m (about R730m) was received for the sale of a 10 percent interest in the PEL platform.
The directors said it was likely to take time for group performance to return to pre-Covid-19 levels, even though its asset base was resilient to date.
IPF shares rose 1.66 percent to close at R7.98 on the JSE yesterday.