Grit Real Estate Income Group, the pan-African income real estate company, has revised its dividend guidance for the year due to covid-19.
The company, which owns 47 assets across Africa that are predominantly US dollar or euro denominated long-term leases, is targeting a full-year dividend of at least US$8.75 cents per share (cps), which equates to 72% of the level of the prior financial year.
The interim dividend declared in February 2020 and paid in April 2020 was US$5.25 cps. The company said rent collection rates for May, June and July 2020 would best reflect the prevailing level of income generation from its property portfolio over the short term and inform the board on the final dividend.
The group has collected over 80% of rents in April and 76% in May. It has also collected $3.15m in prepaid rents for the 2020 calendar year over this period.
It has agreed short-term concessions with tenants, primarily in the retail segment, on up to 9% of rental revenue due for April and up to 12% for May.
Short term payment deferrals have been agreed or are being finalised on up to 16% of rental revenue due for April and May, and are therefore now due in the company’s next financial year, driven primarily by the hospitality sector assets.
Grit’s corporate accommodation, industrial and office sector assets, which collectively represent around 48% of its total net asset value as at 31 December 2019, remain largely unaffected to date. Concessions worth less than 0.05% of monthly contracted rental revenue for May and June 2020 have been agreed across these assets.
In the hospitality sector, which makes up 18.8% of its total net asset value as at 31 December 2019, the company is expecting to provide up to nine months of rent deferral support to Club Med at the Cap Skirring resort. Grit has agreed a revised development programme spend of €2.5m (from €6.5m previously), undertaking only key refurbishment works on the property to facilitate a targeted re-opening in October 2020. The phase II development programme (up to €28m) has been delayed until the hospitality market has stabilised.
In Mauritius, amendments to the Landlord and Tenant Act include a six-month rent deferral option up to August 2020, to be collected in instalments through to 31 December 2021.
The retail sector, which makes up 32.1% of Grit’s total net asset value as at 31 December 2019, has been hit by lockdowns across the continent. In Morocco, authorities have extended the country’s state of emergency to 10 June 2020, resulting in the continued closure of retail stores, restaurants, and entertainment venues across the country. Grit is providing proportionate support programmes, including varying levels of rental concessions and rent deferrals through to December 2020 to tenants whose operations are materially impacted at its Anfa Place Shopping Centre.
The group has a loan to value (LTV) of 43.9%, at 31 December 2019, and a weighted average debt maturity of 2.84 years. Grit has accessed revolving credit facilities since the onset of the pandemic, which is expected to take group LTV above 45% at the financial year end.
As a precautionary measure, the company has agreed, or is in advanced discussions, with its lenders to extend LTV and interest cover covenants and introducing interest holidays on some individual loans.
The group’s lowest currently imposed LTV covenant stands at 53%, implying a minimum headroom of US$74.8m as at 31 December 2019.
The group’s lowest imposed EBITDA covenant stands at 2x against 2.29x as at 31 December 2019. The group said it has seen significant improvements in the ratio as a result of LIBOR rate reductions and expense normalisation.
The company has no debt maturities before May 2021 except for a US$15m bullet instalment payment due in October 2020. The company said it was working to restructure the October instalment and would make an announcement in due course.
GR1T : Grit Real Estate revises dividend guidance