RDI REIT has collected 70.1% of rents due in June.
This figure reflects both quarterly payments and monthly payments and compares to the 54.0% it collected in the same time post the March quarter due date.
The group said it expects the current collection rates to improve or, in certain cases, result in agreements to remove break options or extend leases.
Rent collected across the UK portfolio (excluding UK Hotels and London Serviced Offices) totalled 68.0%, while rents collected across its European portfolio, which are typically paid monthly in advance, were 91.4%.
Rents associated with the RBH managed hotels are paid quarterly in arrears. No rental payments are anticipated for the second half of the financial year ending 31 August 2020.
Rents for the group’s five-asset Travelodge portfolio have been received in full based on the revised rents following the recent CVA.
On the London serviced office portfolio, the group received 67.1% of rent in June, while 96.8% of licence and fixed service fees billed were collected. The discount it has offered on desk rates has been reduced to 25% from 50%.
Dividend
After suspending its dividend following the covid-19 outbreak, the group said a decision on the timing of reinstating dividend payments will be made alongside the full year results to 31 August 2020.
Operational update
Portfolio occupancy at the end of May 2020, excluding RBH managed hotels and London Serviced Offices, was 96.3%.
- UK Hotel portfolio
The group’s UK hotel portfolio comprises 18 assets (13 assets managed by RBH Hotel Group and five assets let to Travelodge). Occupancy across the RBH managed portfolio averaged 24.1% for the four months to the end of June 2020, achieved largely through contracts entered into with local authorities and agencies for occupation by rough sleepers, the NHS and other key workers.
As at 30 June, 10 hotels were open and trading. The remaining hotels are anticipated to open during July 2020. The group said demand for forward bookings has steadily increased in recent weeks.
The impact of Travelodge’s CVA, which was approved on 19 June 2020, is that RDI’s annual rent of £2.1m will be reduced by:
· £0.4m for the financial year ending 31 August 2020;
· £0.9m for the financial year ending 31 August 2021; and
· £0.3m for the financial year ending 31 August 2022.
From December 2021, rents will revert to the full contractual position. All outstanding payments have recently been received in full, in accordance with the CVA.
Under the terms of the CVA, landlords have the right to terminate certain leases by giving notice prior to 19 November 2020. This is being actively considered on two hotels where opportunities exist to either operate the hotel directly under a different brand through the company’s associate RBH, or where other hotel operators have expressed an interest in taking a lease.
- London Serviced Office portfolio
The London Serviced Office portfolio re-opened on 1 June 2020. Occupancy at the end of May 2020 was 86.2% (29 February 2020: 89.5%).
- UK Distribution and Industrial
The group said leasing and asset management activity across the portfolio remained active with a number of lease extensions, rent reviews and new lettings in progress. A 168,154 sq ft unit at Link 9, Bicester has been placed under offer which, if concluded, would bring the distribution and industrial portfolio to full occupancy.
- UK Retail portfolio
All retail assets re-opened in full on 22 June 2020. Footfall numbers across its retail parks portfolio for the week ending 22 June 2020 were, on average, 82.9% of footfall compared to the same week last year.
Footfall numbers across its two shopping centres for the week ending 22 June 2020 were, on average, 41.1% of footfall compared to the same week last year.
Occupancy across the UK retail portfolio at the end of May 2020 was unchanged at 98.1%. The impact of recently announced CVAs and administrations has impacted five units totalling 38,000 sq ft with a passing rent of £0.8m a year. Terms have been agreed with a new tenant on one unit of 6,400 sq ft and it is in discussions with other parties on the other four.
Financing
The group’s £671.9m debt reflects a pro-forma loan to value (LTV), including disposals exchanged or completed, of 41.8% against a weighted average LTV covenant across the group’s facilities of 66.7%.
Covenant waivers are in place on 96% of debt subject to financial covenants. All of the group’s financing facilities are secured against portfolios or individual assets with no recourse to the group.
It has a current cash balance of around £80m, and capital commitments for the next 12 months are limited at less than £2m.
RDI : RDI REIT collects 70.1% of rents in June