CAPE TOWN - London and JSE-listed RDI Reit's third quarter income collection, including the managed hotel portfolio and London serviced offices, amounted to 59 percent of the anticipated amount after government-enforced closures due to the Covid-19 virus impacted a number of the property assets.
Chief executive Mike Watters said yesterday that RDI was actively engaging tenants across the portfolio and assisting occupiers most in need. March rent collection, excluding income from operation assets, stood at 83.1 percent. He described the operational and asset management performance in the six months to February 29 as “robust”, and said the business was well placed to face challenges posed by the Covid-19 pandemic.
Underlying interim earnings fell to £20.8m (R472m) from £26.4m at the same time last year, but Watters said the decline had been flagged to investors earlier, because it had arisen from the sale of assets, the proceeds from which had been used to reduce leverage.
Strategy to improve the quality of the portfolio and strengthen the balance sheet had remained unchanged, with significant progress made to date.
Some £156m of disposals were completed at an average premium of 1.7 percent to market value, with a further £140m of disposals under way as the withdrawal from Germany and non-core UK assets continued.
However, said Watters, given conditions in the market, these sales might take longer to conclude. Nonetheless, some were likely to be completed and proceeds would be used to reduce loan to value, which ended the interim period marginally lower at 41.8 percent. Sixty nine leasing companies leasing events were completed in the interim period. Occupancy was high at 96.5 percent.
RDI’s assets include serviced offices, UK hotels, UK distribution, industrial and automotive, shopping centres, and UK retail parks and other retail.
Capital expenditure was being cut, operating costs reduced and cash reserves of £85m were being maintained.
“We are releasing interim results in unprecedented times, but the actions taken over the last 12 months, including our disposal programme and balance sheet management, have put us in a position to weather the extraordinary conditions we face,” said chairperson Gaving Tipper.
An interim dividend was not declared to preserve liquidity and distributions based on the results for the full financial year would be revisited.
Watters said over the last few weeks, the focus was on “surviving”’ and actively engaging with tenants and taking necessary actions to ensure that RDI was best equipped to withstand the challenging period. He said if any property sector had been a winner in the UK it was the warehousing and distribution sector, with already some 20 percent of all retail sales in the UK now online, a figure expected to grow to 30 percent in a matter of years. In addition, the short-term demand for storage had increased due to lockdown-related issues for businesses.
He said RDI was trying to increase its exposure to this part of the UK property sector.
RDI’s share price closed 3 percent lower at R11.01 on the JSE yesterday.