UK Commercial Property REIT (UKCM) has committed to paying a quarterly dividend at a reduced rate of 50%.
The company, which owns a diverse portfolio of 40 commercial properties in the UK, said it has put future dividends under review.
It said: “The board has taken the decision to maintain a quarterly dividend, due in May 2020, but at the reduced rate of 50% which equates to 0.46 pence per share, while clearly communicating its aspiration to use the strength of its balance sheet and its current financial resources to continue paying a dividend throughout this period of uncertainty.
“The board will, however, continue to monitor closely the evolution of covid-19, together with its impact on the economy, rent receipts and recurring earnings, while balancing the income requirements of its shareholders, and keep its future dividend policy under review. In particular the board will have clear visibility of 2020 earnings at the time of the Q4 distribution and therefore this will provide the opportunity to review the total dividend distribution for 2020 and future dividend policy.”
UKCM has received 68% of rent due in advance for the current quarter from its 233 tenants, at close of business on 22 April 2020. This includes tenants that have paid on a monthly advanced basis.
Of the 32% rent remaining outstanding, 12% is derived from the industrial and office sectors – both areas in which the company is more confident of recovery. UKCM said it was in close communication with struggling tenants and could offer alternative rent solutions from deferral of repayment to rent rebates in return, for example, for extensions of leases.
Portfolio Valuation
UKCM’s portfolio valuation as at 31 March 2020 was £1.29bn, which represents a 3.1% like for like decline from 31 December 2019. The valuation, split by sector, is as follows:
- Industrial, £669.2m, -1.0%
- Retail, £251.6m, -7.3%
- Offices, £222.0m, -2.4%
- Alternatives, £148.1m, -8.2%
The valuation included the “material uncertainty clause” due to the covid-19 pandemic. More information on the clause can be found here.
During February and March 2020, the company completed two sales at prices agreed before the covid-19 outbreak, as well as one investment. This comprised: the £29.8m sale of Motor Park in Portsmouth to Glasgow City Council, representing a 3% discount to the December 2019 valuation; the sale of Broadbridge Retail Park in Horsham for £18.1m, in-line with the September and December 2019 valuations; and the forward funding of a new 221 bed student residential development in central Exeter for £6.5m with an additional capped funding commitment of £21.5m.
Financial Resources
The company has financial resources available of £154m, made up of uncommitted cash of £54m after allowing for future capital commitments and the May 2020 dividend plus £100m available from its revolving credit facility.
UKCM has low net gearing of 13%, based on the 31 March 2020 valuation. The debt has an overall blended interest rate of 2.74% per annum with a weighted maturity of 7.9 years.
The company will publish final full year 2019 results during May 2020. In addition, a full quarterly net asset value statement for the quarter ending 31 March 2020 will also be issued shortly, it said.
UKCM : UK Commercial Property REIT commits to a reduced dividend