Delay in sealing Portugal deal hits Greenbay
A delay in the completion of an acquisition in Portugal is expected to significantly reduce Greenbay Properties’ full-year dividend growth.
CEO Stephen Delport described the company’s results for the quarter ended June as solid, but cautioned the full-year dividend growth would be less impressive than hoped, due to some regulatory issues that affected the acquisition of half of a Portuguese shopping centre it did not already own.
"The delay in the completion of our Portuguese acquisition due to unforeseen circumstances, and the board’s decision to reduce the current leverage through sales from our listed portfolio of stocks, will result in a reduction in the forecast distribution growth for the 2018 financial year to between 15% and 20%," said Delport.
The company had been guiding for distribution growth of 25%.
Delport said Greenbay had been trading below its net asset value per share and the board had decided to take advantage of this discount and repurchase up to 30% of its shares in issue.
A 2019 September financial year distribution forecast would be released in November 2018 with the release of the firm’s annual results, when there would be greater certainty on new direct acquisitions.
The company was considering buying an asset outside of the Iberian peninsula, which could boost its dividend growth.
Nesi Chetty, head of listed property at Momentum Investments, said Greenbay’s share buyback scheme would be accretive over time and that the share offered value at its current price levels.
Delport said the company had "generated solid results for the quarter ended June 2018" wherein its net asset value per share increased from €8.82 at March 2018 to €9.41 at June 2018, an increase of 6.7%.
He said investments in infrastructure-focused stocks contributed the most to the increase in net asset value.
Peter Clark, a portfolio manager at Investec Asset Management, said "lower levels of distribution growth going forward should have been expected as the underlying cash flows are not growing at the same pace".