Redefine mulls distribution options as it faces additional R420m tax cost
Landlord defers decision on payout until February and may offer shareholders more shares
Diversified landlord Redefine Properties says it is considering distribution options that will preserve cash and its status as a real estate investment trust (Reit), warning of continuing uncertainty from the Covid-19 pandemic that may require further concessions to tenants.
Redefine swung into a loss exceeding its R13.7bn market capitalisation in its year to end-August, hinting on Tuesday that it may offer its shareholders additional shares instead of a distribution, with an option of cash, as it seeks to retain its Reit status.
The group has deferred a decision on a distribution for its year to end-August until February, saying on Tuesday should it not make a payout it could be liable for R420m in taxes.
Real estate investment trusts (Reits) are supposed to pay a minimum of 75% of their distributable income as dividends for their full financial year so they can act as income-focused stocks.
The group has until the end of February to make the distribution, but said on Tuesday it cannot give forward-looking guidance due to the persistent threat posed by the pandemic, and further restrictions in SA due to rising case numbers could put additional pressure on its tenants.
Redefine said it is “considering a distribution mechanism that would enable Redefine to meet its Reit regulatory obligations on a basis that will allow for the retention of a significant amount of cash to enhance Redefine’s liquidity while providing shareholders with a means to monetise the proposed distribution.”
Law firm Cliffe Dekker Hofmeyr said earlier in 2020 that while the issuance of shares to shareholders by itself would not constitute a distribution, should the company also offer the option of receiving cash, this would receive the same dispensation as a distribution.
Redefine’s revenue fell 0.1% to R8.78bn in its year to end-August, with the group swinging into a R16.6bn loss, from profit of R3.5bn previously.
Distributable income per share for the year fell 49% to R51.5c.
The value of the group’s properties fell by R7.2bn, primarily due to the economic damage caused by Covid-19.
The group’s assets were valued at R81bn at period end, predominantly anchored by domestic directly held retail, office and industrial properties, along with retail and logistics property assets in Poland.
Redefine’s local property assets were valued at R65.4bn and its international real estate investments at R15.6bn.
The group provided rental relief packages to tenants amounting to R318m, while credit losses increased by R310.4m, given the heightened risk of tenants failing to meet their commitments.
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