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No Capital & Regional dividends for Growthpoint in 2020

As the UK property fund retains cash to withstand Covid-19 fallout.
Growthpoint is likely to feel some pain around the sharp drop in the market value of its UK investment. Image: Moneyweb

South Africa’s largest primary-listed real estate investment trust (Reit) Growthpoint Properties secured a majority R2.9 billion stake in struggling London-based property counter Capital & Regional in December 2019.

Now, due largely to the global Covid-19 economic fallout, Growthpoint won’t be getting any dividends from its UK investment for the 2020 financial year.

Capital & Regional, which released its results for the year to December 2020 on Tuesday, said it will not be paying dividends for the year.

For its 2019 financial year, it paid out a final dividend of 21 (UK) pence per share.

The group reported a 30.8% (£15.2 million) plunge in net rental income (NRI), which came in at £34.1 million in 2020, compared to £49.3 million in 2019.

This saw its “adjusted profit” plummet 62.4%, to £10.3 million, compared to £27.4 million in the prior year.


“As at 30 December 2020, the group had total cash on balance sheet of over £80 million, of which £60 million was maintained centrally and without any restriction, equivalent to more than one year’s gross rental income,” Capital & Regional noted in its results statement on the JSE.

“In light of the current level of uncertainty and desire to maximise cash flexibility, the group has not declared a final dividend and will maintain this position until market circumstances improve,” it added.


Growthpoint’s 51.2% stake in the UK fund is small compared to its South African assets (its 50% V&A Waterfront stake is valued at around R9 billion), so it may only face a slight impact from Capital & Regional’s decision not to pay an annual dividend.

However, where Growthpoint is likely to feel some pain is around the sharp drop in the market value of its UK investment, which lost over 70% of its JSE market cap last year. Capital & Regional has a primary listing in London and a secondary listing in Johannesburg.

Read: Growthpoint is not overpaying for Capital & Regional, says Sasse

Growthpoint released its interim results for the six months ended December 31, 2020 on Wednesday morning. The group is anticipated to give more details on the performance of its UK investment in results briefings to media and Reit sector analysts this week.

Capital & Regional, which owns seven community-focused urban shopping centres in and around London, has seen a 39% recovery in its share price for this year to date.

Its JSE market cap sits at R2.15 billion, which gives an idea of the lost value for Growthpoint.

Despite the Covid-19 financial blow in 2020 due to the UK’s pandemic-related lockdowns, Capital & Regional’s share price closed 13.3% up (R19.25) on the JSE on Tuesday following the release of its results.

This may be linked to the UK government’s ambitious vaccination drive, which has seen over 22 million people in the country already vaccinated.

The share prices of both

“The last 12 months have been the most extraordinary in living memory,” Capital & Regional CEO Lawrence Hutchings remarked in the group’s results Sens statement.

“Few could have foreseen the scale, devastating impact, or duration of the Covid-19 pandemic which is both a humanitarian and economic crisis. Like the majority of businesses in the sector, all aspects of the company’s operations were materially impacted by the measures put in place by the [UK] government to manage the pandemic,” he said.

Read: Growthpoint plunges over 16% after R4.3bn capital raise

“This has put significant pressure on our income, valuations and therefore leverage and we have been appreciative of the support and flexibility provided by our lenders in waiving covenants that would otherwise have breached,” he added.

Physical and online retailing distortion

Hutchings pointed out that Covid-19 has also had the impact of “accelerating the underlying long-cycle structural shift in the [retail property] sector” which he said is distorting the balance between physical and online retailing.

“However, we believe that the combination of our community centre strategy, which had clear sight of the structural changes, and our focus on local destinations providing non-discretionary goods and services has never been more relevant, as evidenced by our relative performance on the areas within our control,” he said.

“The quality and performance of our management platform is recognised by our major shareholders and our lenders and has inherent value which transcends the recent market challenges.”



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The UK is going to be a painful place for business over the next few years. Brexit uncertainty and new increases in corporate tax rates.

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