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Secure Income declares quarterly divi, continues talks with Travelodge
23rd Apr 2020 16:32
(Sharecast News) - Secure Income REIT declared an interim quarterly dividend of 4.2p per share on Thursday, to be payable on 29 May to shareholders on the register on 1 May.
The AIM-traded real estate investment trust said the dividend would be paid as a property income distribution over its tax-exempt property rental business.
It noted that neither itself or its investment adviser Prestbury were using any of the employee or fiscal assistance schemes provided by the UK government to ease the burden of the pandemic.
"As announced in the company's Covid-19 update on 6 April, the dividend for the current quarter is being maintained at the same rate as the previous quarterly dividend," the board said in its statement.
"Since that announcement, an additional ?0.6m of rents have been collected and a further ?1.6m fell due, completing the March quarter billing cycle."
Secure Income said 74% of all rents due for the March quarter had therefore been received, with the only rents now outstanding being those due from Travelodge, as it announced on 20 April, with the overdue rents representing 6.4% of its annual rental income.
"Following our announcement of 20 April, the company finally received a proposal from Travelodge, which was not in keeping with either the nature or the spirit of the proposals made by any of our other tenants who all engaged with us constructively and at an early stage.
"We have not been able to accept the proposal from Travelodge but have offered support which we believe to be proportionate and consistent with the approach accepted by other tenants in our portfolio."
Until the pandemic struck, Secure said that Travelodge had "substantial" earnings and "significant" operating cash flows, with the firm considering that the business had "considerable" equity value as well as long-term viability.
It said it also had "very substantial" shareholders in Goldman Sachs, Goldentree and Avenue Capital.
"We will therefore endeavour to work with Travelodge and its owners to find a reasonable solution to ease the current cash flow issues brought about by the lockdown.
"We are keen to strike a fair and reasonable balance between easing the cash flow burdens on our tenants brought about by the pandemic, and protecting the interests of our own shareholders, lenders and other stakeholders with a constructive and sensible approach to rent deferrals.
"We are hopeful that such a balance can be struck with Travelodge and their owners too."
Secure Income said the impact of the lockdown measures to manage the impact of the Covid-19 pandemic were still being felt by many businesses in the UK and globally.
It said that, while the length of time over which the lockdown conditions would continue remained uncertain, as did the process for exiting the lockdown and returning businesses to normal operations, it was working "very constructively" with those of its leisure portfolio tenants which had requested help to assist their liquidity management while their businesses were closed.
"We have had very strong relationships with our tenants going back in most cases over 13 years or more.
"In assessing any proposals from them for cash flow deferrals, we consider the strengths of the individual businesses and their track records.
"We believe that the assistance we have provided reflects our partnership approach with our tenants, whom we hold in high regard, and underpins both their and the Company's long-term futures."
Secure Income said it was in advanced stages of discussions, including supportive input from its lenders, to defer rental payments in order to assist with the timing of tenant operational cash flows.
As of Thursday, 15.6% of the total group passing rents of ?110.7m as at 31 December was expected to be subject to deferral, reducing cash rents receivable in June and September 2020, with repayment of the deferred rents in full in September 2021 to coincide with the tenant business' maximum liquidity position.
Additionally, 1.0% of rents were subject to short term deferrals, such that cash flow was spread in order to assist tenants, and where the deferral and full recovery of rents was within the current financial year ending 31 December.
"The next quarterly dividend is expected to be announced on 23 July.
"The board will continue to keep dividend payments under review, recognising the importance of maintaining a balance between retaining funds for opportunities should they arise, appropriate cash reserves given the uncertain duration of the pandemic and the desire of the company's investors to preserve their dividend income."
At 1629 BST, shares in Secure Income REIT were down 4.47% at 278p.
The AIM-traded real estate investment trust said the dividend would be paid as a property income distribution over its tax-exempt property rental business.
It noted that neither itself or its investment adviser Prestbury were using any of the employee or fiscal assistance schemes provided by the UK government to ease the burden of the pandemic.
"As announced in the company's Covid-19 update on 6 April, the dividend for the current quarter is being maintained at the same rate as the previous quarterly dividend," the board said in its statement.
"Since that announcement, an additional ?0.6m of rents have been collected and a further ?1.6m fell due, completing the March quarter billing cycle."
Secure Income said 74% of all rents due for the March quarter had therefore been received, with the only rents now outstanding being those due from Travelodge, as it announced on 20 April, with the overdue rents representing 6.4% of its annual rental income.
"Following our announcement of 20 April, the company finally received a proposal from Travelodge, which was not in keeping with either the nature or the spirit of the proposals made by any of our other tenants who all engaged with us constructively and at an early stage.
"We have not been able to accept the proposal from Travelodge but have offered support which we believe to be proportionate and consistent with the approach accepted by other tenants in our portfolio."
Until the pandemic struck, Secure said that Travelodge had "substantial" earnings and "significant" operating cash flows, with the firm considering that the business had "considerable" equity value as well as long-term viability.
It said it also had "very substantial" shareholders in Goldman Sachs, Goldentree and Avenue Capital.
"We will therefore endeavour to work with Travelodge and its owners to find a reasonable solution to ease the current cash flow issues brought about by the lockdown.
"We are keen to strike a fair and reasonable balance between easing the cash flow burdens on our tenants brought about by the pandemic, and protecting the interests of our own shareholders, lenders and other stakeholders with a constructive and sensible approach to rent deferrals.
"We are hopeful that such a balance can be struck with Travelodge and their owners too."
Secure Income said the impact of the lockdown measures to manage the impact of the Covid-19 pandemic were still being felt by many businesses in the UK and globally.
It said that, while the length of time over which the lockdown conditions would continue remained uncertain, as did the process for exiting the lockdown and returning businesses to normal operations, it was working "very constructively" with those of its leisure portfolio tenants which had requested help to assist their liquidity management while their businesses were closed.
"We have had very strong relationships with our tenants going back in most cases over 13 years or more.
"In assessing any proposals from them for cash flow deferrals, we consider the strengths of the individual businesses and their track records.
"We believe that the assistance we have provided reflects our partnership approach with our tenants, whom we hold in high regard, and underpins both their and the Company's long-term futures."
Secure Income said it was in advanced stages of discussions, including supportive input from its lenders, to defer rental payments in order to assist with the timing of tenant operational cash flows.
As of Thursday, 15.6% of the total group passing rents of ?110.7m as at 31 December was expected to be subject to deferral, reducing cash rents receivable in June and September 2020, with repayment of the deferred rents in full in September 2021 to coincide with the tenant business' maximum liquidity position.
Additionally, 1.0% of rents were subject to short term deferrals, such that cash flow was spread in order to assist tenants, and where the deferral and full recovery of rents was within the current financial year ending 31 December.
"The next quarterly dividend is expected to be announced on 23 July.
"The board will continue to keep dividend payments under review, recognising the importance of maintaining a balance between retaining funds for opportunities should they arise, appropriate cash reserves given the uncertain duration of the pandemic and the desire of the company's investors to preserve their dividend income."
At 1629 BST, shares in Secure Income REIT were down 4.47% at 278p.