Mid-cap JSE-listed real estate investment trust (Reit) Emira Property Fund on Wednesday reported a 13.9% decline in distributable earnings for its half-year to the end of December 2020.
However, the group declared an interim dividend of 52 cents per share (cps), despite the impact of the Covid-19 pandemic on its retail, office and industrial properties. The interim dividend is 22.1 cents lower than its corresponding 2019 half year.
Emira, which has a total property and investment portfolio of almost R13 billion – including retail investments in the US – going ahead with an interim dividend comes as some of its other SA Reit peers have opted to withhold paying out interim and even full-year dividends.
“Distributable earnings for the six months ended December 31, 2020 has decreased from the prior corresponding period by 13.9% to R333.7 million,” the group noted in its interim results statement on Sens.
“After taking into account the adjustments relating to the effects of Covid-19, which reflect the cash backed position, the board of directors of Emira has approved the declaration of an interim dividend of 52 cps for the six months,” Emira added.
The group, however, pointed out that the interim dividend comes “after the deferral of 5.09 cents of the available cash backed dividend per share” to the second half of the year.
It explained that the deferral “is prudent given the uncertainty on the future operational performance” considering Covid-19.
“As anticipated, global economies continue to be constrained by the impact of Covid-19 and the related lockdowns,” Emira said.
“The diversified nature of Emira’s investments on a sectoral and geographical basis, including its offshore exposure and its co-investment methodology, has proved defensive seeing some sectors and regions being hit harder than others,” the group, however added.
Commenting on the results, Emira CEO Geoff Jennett, said that the interims reflect the robustness of the group’s business, portfolio and processes in the face of the current uncertain and challenging operating environment.
“A key feature of a Reit investment is its cash-backed income component and at Emira we believe that if we can reasonably pay dividends while still protecting our business’s longevity, we should,” he added.
“We are confident that our decision to pay an interim dividend, albeit at suitably conservative levels, is the right one for our shareholders,” Jennett said.
In its Sens, Emira noted that the group remains focused on maintaining the strength of its balance sheet and occupancy levels, and collecting rentals, to ensure that it comes through the trying times in the best possible position.
Reacting to Emira’s interim results, Kundayi Munzara, an executive director and portfolio manager at Sesfikile Capital, said the drop in distributable earnings came within Sesfikile’s expectations.
“We are pleased the board has declared a dividend for shareholders. What is encouraging for us is the recovery in rental collection rates, vacancy rates remaining low at 5.9%, and, a relatively modest asset valuation write-down that has reduced the NAV [Net Asset Value] by only 3.6% over six months,” he said.
“This places the share price at an approximate 50% discount to NAV. These results may indicate that the market has likely priced many SA listed property stocks for bankruptcy, which is definitely not the case,” added Munzara.
Following the release of its latest interim results, Emira’s share price was 2.4% down (at R7.32) in early trade on Wednesday.