Rebosis update forces Arrowhead to restate dividend drop
Arrowhead Properties has revised its already lower dividend forecast into even worse territory, after Rebosis Property Fund, of which it owns a significant stake, released a negative trading update on Monday.
Rebosis, in which Arrowhead has an approximately 18.6% interest through a holding of Rebosis B shares, said it would be "rebasing its earnings" for the interim period and year to end-August 2018.
After assessing the effect of Rebosis’s revised guidance in respect of the dividend per B share for the year ending September 30 2018, Arrowhead said it now expects its dividends to be between 11% and 12% lower compared to the 6.5% drop previously forecast.
Accordingly, the dividend for the six-month period ending September 30 2018 is expected to be between 37.46c per share and 36.59c per share, the group said.
Arrowhead’s CEO, Mark Kaplan, said the move was a positive one by Rebosis. "Rebosis has taken the right step by accounting for once-off items now and effectively rebasing its earnings down. We rebased our dividend growth to a sustainable level ourselves so what Rebosis has done is in line with our strategy," Kaplan said.
He said it is "better to take short term pain now" than over a longer period. Listed property was experiencing a particularly difficult period in SA. "We have also noted that Rebosis has chosen to reduce gearing by selling government offices over time. These are all steps which help the fund be cautious amid these operating conditions."