Warehouse REIT has committed to paying its 2020 dividend target.
The group paid its third quarter dividend of 1.6p per share on 31 March 2020 and added that it remained committed to meeting its dividend target for the financial year to 31 March 2020 of 6.2p per share.
As at 7 April 2020, it collected 74% of contracted rent due for the quarter to 24 June 2020 and said this number increases to 82% where tenants we have agreed will pay monthly rather than quarterly are included.
The company, which has a portfolio of 95 assets and 560 tenants, said it had received a “small number” of support requests from tenants facing financial hardship and, “reflecting the importance it places on its occupier relationships and the understandable impact that covid-19 has had on the cashflow of small businesses”, it had negotiated alternative payment arrangements where necessary.
Financial position
As at 31 March 2020, the company had around £5.5m of cash and £33.5m of headroom on its undrawn facilities. Based on net debt of £181m as at 31 March 2020 and the latest portfolio valuation as at 31 January 2020, the company’s loan-to-value is 39.9%.
In January 2020, the company entered into a new five-year £220m debt facility with a club of four banks, replacing an existing HSBC facility totalling £210m. The refinancing comprised a £157m term loan and a £63m Revolving Credit Facility. Based on the current drawn company net debt, Warehouse REIT’s pro forma margin has reduced from a blended 2.14% to 2.00% plus LIBOR on all of its bank debt. There are no debt maturity dates prior to January 2025.
The facilities have significant headroom on both a loan-to-value and interest coverage ratio basis: valuations would need to fall 25% or rent would need to fall 45% when compared to 30 September 2019 before these covenants are breached.
Market update
The company said the covid-19 pandemic had led to significant pressure being placed on the UK’s logistics and distribution capabilities, and a number of the company’s tenants are currently experiencing significantly increased trading volumes due to their involvement in the supply of critical goods and services to businesses and consumers.
As a result, the company said it was seeing ongoing demand for its warehouse space and had secured new lettings which are expected to generate a further £183,000 of annual rent since the lockdown came into place on 23 March 2020.
Furthermore, it said it was in active discussions with both existing and potential occupiers for additional space across the portfolio.
Results for the year ended 31 March 2020 are expected to be announced in late May.
WHR : Warehouse REIT commits to 2020 dividend