Tritax Big Box REIT has withdrawn its dividend target for 2020 in light of the covid-19 pandemic.
The company has collected the majority of its advanced quarterly rent that was due on 1 April 2020 (86%, with a further 10% expected to be paid by the end of May 2020).
Around 50% of Tritax Big Box’s annual rent is generated by tenants that are in defensive sectors to covid-19: ecommerce, food retail and third party logistics operators (including postal couriers). Its top five tenants by income are Amazon (13.1%), Morrisons (6.8%), Howdens (5.2%), Co-op (4.8%) and Tesco (4.3%).
Around 95% of Tritax Big Box’s buildings remain fully operational, with three temporarily running with a skeletal maintenance staff framework.
The near-term cash flow pressure on some of its tenants and the uncertainty on the duration of the pandemic and its impact on the economy have led the group to withdraw its dividend guidance for the current financial year. It had a dividend target of 7.0p per share for FY2020.
It will continue to pay a quarterly dividend, and today declared a quarterly dividend for the period 1 January to 31 March 2020 of 1.5625p per share. It said it believes this is a conservative level allowing the company to continue to deliver on its business plans whilst noting that the duration and effects of covid-19 may be extended.
It added that it would monitor the dividend position for FY2020 and would potentially increase the quarterly dividend when it has better visibility.
Balance sheet and covenant headroom
The group’s loan-to-value (LTV) ratio was 30% at 31 December 2019 with a weighted average maturity across its loan facilities of 7.5 years. There are no significant refinancing events until 2024.
Immediately available resources under existing, but undrawn, committed borrowings total £500m. The group has capital commitments of around £130m in relation to its forward funded pre‑let development assets, asset management initiatives and commitments to development land.
Rental income and asset values would be required to fall by more than 60% and around 50% respectively before any of the group’s principal debt covenants were breached.
Annual General Meeting
The company intends to hold the Annual General Meeting on 13 May 2020 as planned, but shareholders will not be permitted to attend the AGM in person. Shareholders can cast their proxy votes online and can listen to the proceedings using conference call facilities.
BBOX : Tritax Big Box declares reduced dividend and updates on covid-19 impact