Listed-property clients can weather Covid-19 storm, says Nedbank
The lender will condone covenant breaches only if real-estate businesses are servicing their debt obligations, an official says
Nedbank is confident that many of its clients in the listed-property industry will survive the pressure from lockdown measures in SA. The lockdown was introduced five weeks ago to curb the spread of the coronavirus.
The majority of its customers “have access to sufficient existing liquidity to manage through 3-6 months of a highly stressed environment before requiring any form of additional cash flow relief,” Gary Garrett, the managing executive for the lender’s commercial property finance unit, said on a webcast Wednesday.
Nedbank, the largest commercial-property lender of SA’s five biggest banks, is working with clients experiencing short-term liquidity pressure from the pandemic. It is offering solutions on a case-by-case basis, including capital-repayment holidays and short-term liquidity facilities. The lender will condone covenant breaches only if real-estate businesses are servicing their debt obligations, Garrett said.
None of Nedbank’s listed customers have asked for specific relief related to Covid-19. The pandemic comes as the SA retail-property sector is already battling to let an oversupply of space. Through industry bodies, landlords have sought help from banks and the JSE to keep the sector afloat.
While Nedbank expects pressure on rentals to persist after the pandemic subsides, well-run companies with appropriate gearing levels will be able to absorb this, Garrett said.
SA’s banks have been called on to support the nation’s economy, which has been devastated by regulations aimed at limiting virus infections. The industry is rolling out a loan-guarantee programme backed by the government to keep the doors of small- to medium-sized companies open.
SA’s largest landlords have said they will continue to pay their full obligations while aiding retail tenants with discounts. Clothing retailers are among those being hit hardest by SA’s lockdown with regulations mainly allowing for the sale of food and medicine. Office, logistics, hospitality and other tenants may receive assistance from property owners on a case-by-case basis.
The 22-member FTSE/JSE Africa real estate investment trust Index rose as much as 4.2% on Thursday, paring losses this year to about 49%.
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