RDI tenants get respite from rentals
London and JSE-listed landlord RDI is offering some of its tenants rent-free periods or deferrals as the Covid-19 outbreak batters the property sector, it says.
The company is 29.44% owned by SA second-largest real-estate group Redefine.
The coronavirus pandemic is causing chaos for many retailers around the world. A number of countries have imposed economy lockdowns, during which only essential goods may be sold and essential services provided.
This means apparel, clothing entertainment retailers are losing revenue and have been hesitant to pay rent. In March, another UK landlord, Intu Properties, said it received only 29% of its expected rent for the second quarter.
RDI has spent much of 2019 and the beginning of 2020 selling its properties in Germany, as well as its retail assets as a response to uncertainty around the Brexit process and the rise of online shopping. It has £186m of assets up for disposal, of which £110m are under offer and at various stages of negotiation.
The group said in its update that its disposal programme has reduced its exposure to retail and strengthened its balance sheet, and it remains confident in its longer-term prospects. Due to proactive financing activities its short-term liabilities are limited, it said.
CEO Mike Watters said RDI would primarily own British hotels, light industrial warehouses and flexible-term offices for the foreseeable future.
The group said its loan-to-value ratio stood at 41.8% as at end-February, against an average covenant ratio of 66.7% for its debt. At end-February the group had net debt of £671.9m, an increase from £666.6m on its year ended August 2019.
The group said it is monitoring the effect on the business of the Covid-19 outbreak, and will announce its decision if it would pay a dividend when it releases its results for its six months to the end of February.
“Financial assistance in the form of rent-free periods or rent deferrals are being prioritised for those occupiers most in need and to help support their businesses during this challenging period,” the group said.
All non-essential capital expenditure would be postponed until there was more clarity on the operating environment and visibility around future cashflows.
Previously committed or essential capital expenditure over the next 12 months is to be limited to £1.8m. Essential maintenance and expenditure related to security, health and safety requirements would continue as usual.
Peter Clark, a portfolio manager at Investec Asset Management, said RDI was taking positive steps which could pay off in the future. These included the repositioning of its portfolio and decreasing leverage and retail exposure.
RDI’s share price was down 10.73% to close at R12.81 on Monday.