Industrial and logistics giant SEGRO will pay its final dividend, the company confirmed today.
The group said it was in a strong position financially and has collected 71% of the rent due for the first quarter of the year.
It is in discussion with tenants representing 25% of total headline rent regarding appropriate relief, primarily through re-profiling the timing of rental payments.
SEGRO said its balance sheet was strong with a 26% loan to value ratio as at 31 March 2020, high liquidity and significant headroom to its financial covenants:
It has cash and undrawn facilities of £1.2bn, with £280m of capital commitments as at 31 March 2020. The average maturity of its debt is just under 10 years with no major maturities before 2023.
On its debt covenants, it said rental income would have to fall by 80% or asset values by 64% before any were breached.
The final dividend of 14.4 pence per share is due to be paid on 1 May 2020, subject to approval at the AGM, which will be held online on 21 April. The final dividend has a maximum cash requirement of around £158m.
SEGRO said most development projects scheduled for completion during 2020 will be delayed due to government measures taken to combat the virus, as well as constraints in securing materials and/or labour for our construction sites.
It added: “It is inevitable that there will be some negative effects on earnings in the short term, and it is currently not possible to quantify this as it is dependent upon evolution of the pandemic, the duration and extent of the measures put in place to combat it, and the nature, extent and effectiveness of government support to the sectors of the economy most affected.
“Our customer base is highly diverse. Many of them are involved in the supply of critical goods and services to businesses and consumers and some are looking for additional space both for immediate occupation and to prepare for longer term growth once the crisis is over.
“There are, of course, some businesses which are fundamentally sound but who are suffering short term cash flow issues.”
David Sleath, chief executive of SEGRO said:
“Whilst current global events are unprecedented, we anticipate that the structural trends that have been driving occupier demand for high-quality, well located warehouse space will remain intact and may even be strengthened by the crisis, as the importance of logistics supply chains has been thrown into sharp focus in recent weeks.
“We have a very diversified customer base across a variety of sectors, many of whom are involved in the supply of critical goods and services, but we appreciate that current circumstances are placing pressure on the cash flows of some of our customers. Most of these businesses are fundamentally sound and we are working with them to provide appropriate assistance. While it is too early to fully assess the impact of this crisis, the high quality of our portfolio and the strength of our balance sheet means we are well placed to weather the storm caused by the Covid-19 pandemic.”
SGRO : SEGRO to pay final dividend