Landlord Dipula Income Fund, whose portfolio includes offices, retail and industrial buildings, says it will not make a call on a distribution by the end of February, amid concerns it may face a cash crunch as Covid-19 threatens collections and prompts additional support to tenants.

The group had indicated previously it would decide on a distribution for its year to end-August 2020 by the end of February, but said on Thursday it was concerned its cash position could come under threat from Covid-19.

Associated lockdowns and trading restrictions could necessitate additional support to tenants and adversely affect rental collections, the group said.

It may also need to refinance debt, with lenders laying down more conditions when negotiating the renewal of facilities, the statement said.

“This does not represent any decision to reconsider Dipula’s status as a real estate investment trust (Reit), nor does it preclude the board from considering in the coming months whether or not to make a qualifying distribution for income tax purposes in respect of full-year 2020,” the group said.

Reits are mandated to pay at least 75% of distributable income earned as a dividend annually. This creates tax benefits for them as their profits are taxed at a shareholder level and not at a company level.

Dipula said it was concerned it may not be able to pass liquidity tests if it proceeds with the distribution, and “is not required under applicable regulations to make any distribution in order to comply with its obligations as a Reit”.

The landlord, which owns Chilli Lane mall in Sunninghill and Alberton Mall on the East Rand, had a portfolio of about 190 properties valued at R9.1bn at the end of August.

The group had reported a 12.4% fall in distributable earnings to R447m in its year to end-August, saying that during the year it had provided rental relief of R48.6m.

In morning trade, the group’s A share was unchanged at R6.50, having fallen just more than a third over the past 12 months.

With Alistair Anderson


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