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Resilient delivers dividends, but SA properties devalued by R813m

Group commits to continuing to pay dividends despite Covid-19.
Resilient's Irene Village Mall in Gauteng. Image: Supplied

Real estate investment trust (Reit) Resilient on Wednesday declared a final dividend of 100.48 cents per share for the second half of its 2020 financial year to the end of June.

The move comes as many of its JSE-listed property peers have opted to withhold dividends as they strive to weather the Covid-19 economic storm.

Resilient has also taken a knock from the pandemic fallout, with its South African retail property portfolio being devalued by R813 million for the financial year. However, the comparatively high dividend payout is likely be welcomed by insvestors.

Read: Vukile boss plays down pandemic pressure on property valuations

The group’s second-half dividend declaration takes its total dividend payout for its full year to 368.44 cents per share. This follows the group declaring a dividend of 267.96 cents per share for its half-year to the end of December.

While Resilient’s total dividend payout for the year is 30.6% lower than its prior financial year, it is still higher than that of many of its peers.

“The final dividend was negatively impacted by the Covid-19 lockdown and the termination of the group’s cross-currency swaps,” the group noted in its JSE Sens results announcement. “This was partially offset by lower interest rates in South Africa that benefitted the group as R3.8 billion of interest rate hedges are in the form of interest rate caps.”

Resilient CEO Des De Beer is set to make a presentation on the group’s latest results in a webcast to investors and analysts on Thursday morning.

In its Sens statement, the group pointed out that in calculating its dividend for FY2020, only 59.1% of basic rental from the Edcon group was included. It also noted that its final dividend excludes a portion of distributions from its offshore investments in Nepi Rockcastle and Lighthouse capital.

Read: Major malls will still be hit hard if Edcon business rescue fails

Nepi Rockcastle did not declare a dividend for the six months ending June 2020, while three months’ worth of distributions (April to June) from Lightstone had been excluded due to a change in that company’s financial year end.

Resilient said the second half of its financial year (to end-June) was impacted by the group offering just over R166 million in discounts to tenants. The rental relief was offered in the wake of the impact of Covid-19 on tenants.

“Resilient’s approach to the Covid-19 pandemic has been, and will continue to be, supportive of tenants, particularly SMMEs and leisure-focused tenants,” it noted.

Read:

Fortress writes off 26% of retail rent for April

Rising rate bills adds to commercial property sector woes

The group added that the period was also impacted by “the continued above inflation increases in administered prices, particularly utilities and rates”. This is not the first time Resilient has raised the issue, which also is a bugbear for most listed property counters.

Resilient owns 28 retail centres in South Africa with a gross lettable area (GLA) of 1.17 million square metres. It also has three retail centres in Nigeria with a GLA of 30 015m2.

Devaluations

Regarding property devaluations, the group noted: “Jones Lang LaSalle [JLL] valued the South African property portfolio at June 2020. Resilient’s share of the South African portfolio was devalued by 3.5% [R813 million]. Resilient’s share of the devaluation of the Nigerian properties amounted to US$8 million, as valued by CBRE Excellerate.”

Meanwhile, Resilient said it anticipates that economic recovery will “be gradual and uneven”.

However, the group added that it is well positioned to continue benefitting from the defensive quality of its assets and strong tenant profile.

“In light of the increased uncertainty due to Covid-19, particularly relating to distributions from Resilient’s listed securities, the board is not in a position to provide guidance for FY2021,” the group noted.

Resilient, however, said that it intends to “continue to declare and pay dividends” as it has done in the past. It will continue to pay out 100% of distributable earnings to shareholders.

Resilient share price over five years

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How can Resilient deliver a divided, as per REIT legislation, and yet almost every so called REIT not?

Well done.

Makes you think.

Stellar performance by the usual dynamic SA Entrepreneurs! We are some of the best in the world. South Africans are BRILLIANT!

I still don’t get why all these property companies have debt. In a perfect world this is how you would build a mall or a warehouse as a listed company:
1. Identify mall to buy/build.
2. If you are an existing company, issue more shares to raise the capital to build/buy the mall/warehouse.
3. If your share issue doesn’t make enough money, return monies, if it does, proceed.
4. If construction goes over budget, return to share buyers and tell them to pay more, else abandon the project.
5. Once finished, payout dividends on to shareholders and allow holders to trade shares.

No need for debt!

Cost of capital.
Debt is cheaper than equity; that’s why?

Not always. There are periods where debt can cost you your company. The is awaiting.

That is Brilliant! And I wish they take this advice. Countries need to take your advice! Lets be cash strong. Why be poor and in debt.

True. The financial system wants debt depenancy.

Imagine for how many years management will have to forego bonuses on that billion write-down. After all, the write-up journal entries contributed to bonuses before…?

In the old days accounting was simpler : unrealized gains were a separate line item and largely ignored as people looked at real profits not journal entries

End of comments.

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