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Tritax Big Box to maintain quarterly dividend
8th Apr 2020 07:30
(Sharecast News) - Tritax Big Box updated the market on the impact of the Covid-10 coronavirus pandemic on Wednesday, reporting that a number of its customers were experiencing "unprecedented disruption" to operations as a result of government measures put in place to combat the spread of the virus.
The FTSE 250 real estate investment trust said that had led to an immediate impact on their near-term cash flows.
It said that, while there were various forms of assistance on offer from the government, including loan schemes, it was working with customers where it could through the relaxation of cash flow requirements over the short term.
Tritax said it expected that 96% of rents would be collected by the end of May in respect of advanced quarterly rental payments that were due by 1 April.
That included 86% which had been collected to date, and a further 10% for which alternative short-term payments were expected to follow.
Discussions were ongoing with certain customers over the outstanding 4% of rent due.
Throughout the period, the firm said it was proactively engaging with its customer base, saying 95% of its buildings remained fully operational, with three temporarily running with a skeletal maintenance staff framework.
Tritax said its collaborative approach had been well received, as it endeavoured to share practical advice and guidance to assist with the health, safety and well-being of its customers' staff.
The board said that with regard to its development portfolio, it was actively collaborating with its contractors and developers, to ensure that appropriate working conditions were in place to maintain operations within new Covid-19 guidelines.
At present, there was continued activity at all of its sites, although at reduced levels, which the directors said shows the importance of those buildings in its customers' supply chains.
Tritax Big Box said it had a low risk approach to development, with no speculative construction underway at present.
The company said it would only seek to pursue further developments on a pre-let basis, and where that could be funded without applying pressure on its balance sheet.
In line with its conservative leverage policy, the group's loan-to-value ratio was 30% at 31 December with a weighted average maturity across its loan facilities of 7.5 years.
There were no significant refinancing events due until 2024.
It said immediately available resources under existing, but undrawn, committed borrowings totalled ?500m.
The group had capital commitments of about ?130m in relation to its forward-funded pre‑let development assets, asset management initiatives and commitments to development land.
Rental income and asset values would be required to fall by more than 60% and approximately 50% respectively, the directors said, before any of its principal debt covenants were breached.
In conjunction with its annual results on 17 March, Tritax Big Box confirmed a dividend target of 7p per share for the 2020 financial year.
On Wednesday, it said that given the necessary government intervention in response to Covid-19 since that date, visibility over the economic impact and duration of the pandemic had reduced significantly.
That had resulted in a slowdown in the occupational markets, and increased the likelihood of delays in areas such as planning and construction.
As a result, it considered it "prudent" to withdraw its dividend guidance for the current financial year.
However, it added that the "high-quality nature" of its portfolio, strong financial position and diverse customer base provided it with the confidence to continue paying a quarterly dividend.
The board declared a quarterly dividend for the period from 1 January to 31 March of 1.5625p per share.
It said it believed that was a conservative level, allowing it to continue to deliver on its business plans, while noting that the duration and effects of Covid-19 disruption could be extended.
The directors said they believed that was in the long-term interests of shareholders.
They added that they would continue to monitor the dividend position for the 2020 financial year, with the potential to increase the quarterly dividend when it had better visibility.
Tritax said it intended to hold its annual general meeting on 13 May as planned, but said that due to the current measures imposed by the government, shareholders would not be permitted to attend in person.
"We face unprecedented times as the Covid-19 pandemic spreads throughout the world," said Tritax's chief executive officer of fund management, Colin Godfrey.
"Our first responsibility is to ensure the health, safety and well-being of the manager's employees.
"We are working closely with the group's customers as a fully engaged and supportive landlord, helping where possible."
Godfrey said frequent communication was being maintained with all stakeholders, to ensure it continued to protect the long-term value of its business.
"The company remains well positioned to navigate a prolonged period of uncertainty and to minimise the potential impact on its business and on its financial performance.
"We have a diverse, high-quality customer base and are working with each tenant to understand any operational impact or cashflow pressure created by the global response to Covid-19.
"All our buildings are currently operational, except for three facilities."
Godfrey said the crisis was bringing into "sharp focus" the need for occupiers to have a "robust, flexible" supply chain and the importance of operating in "prime, well-located" buildings.
"This pandemic may act as a catalyst for change, accelerating the adoption of e-commerce platforms as consumers increasingly shop online.
"This will continue to drive demand for logistics space as occupiers' build in resilience and capacity to limit future potential disruptions."
He explained that, with a lack of visibility on the depth or duration of the crisis, the company was working to ensure that it remained in a "robust position" over the longer term by maintaining its existing strong relationships with customers.
"We are also preserving a well-funded balance sheet by taking a disciplined approach to all non-essential capital expenditure, whilst adopting a conservative stance in relation to our first quarter dividend payment."
At 0935 BST, shares in Tritax Big Box REIT were down 0.41% at 120p.
The FTSE 250 real estate investment trust said that had led to an immediate impact on their near-term cash flows.
It said that, while there were various forms of assistance on offer from the government, including loan schemes, it was working with customers where it could through the relaxation of cash flow requirements over the short term.
Tritax said it expected that 96% of rents would be collected by the end of May in respect of advanced quarterly rental payments that were due by 1 April.
That included 86% which had been collected to date, and a further 10% for which alternative short-term payments were expected to follow.
Discussions were ongoing with certain customers over the outstanding 4% of rent due.
Throughout the period, the firm said it was proactively engaging with its customer base, saying 95% of its buildings remained fully operational, with three temporarily running with a skeletal maintenance staff framework.
Tritax said its collaborative approach had been well received, as it endeavoured to share practical advice and guidance to assist with the health, safety and well-being of its customers' staff.
The board said that with regard to its development portfolio, it was actively collaborating with its contractors and developers, to ensure that appropriate working conditions were in place to maintain operations within new Covid-19 guidelines.
At present, there was continued activity at all of its sites, although at reduced levels, which the directors said shows the importance of those buildings in its customers' supply chains.
Tritax Big Box said it had a low risk approach to development, with no speculative construction underway at present.
The company said it would only seek to pursue further developments on a pre-let basis, and where that could be funded without applying pressure on its balance sheet.
In line with its conservative leverage policy, the group's loan-to-value ratio was 30% at 31 December with a weighted average maturity across its loan facilities of 7.5 years.
There were no significant refinancing events due until 2024.
It said immediately available resources under existing, but undrawn, committed borrowings totalled ?500m.
The group had capital commitments of about ?130m in relation to its forward-funded pre‑let development assets, asset management initiatives and commitments to development land.
Rental income and asset values would be required to fall by more than 60% and approximately 50% respectively, the directors said, before any of its principal debt covenants were breached.
In conjunction with its annual results on 17 March, Tritax Big Box confirmed a dividend target of 7p per share for the 2020 financial year.
On Wednesday, it said that given the necessary government intervention in response to Covid-19 since that date, visibility over the economic impact and duration of the pandemic had reduced significantly.
That had resulted in a slowdown in the occupational markets, and increased the likelihood of delays in areas such as planning and construction.
As a result, it considered it "prudent" to withdraw its dividend guidance for the current financial year.
However, it added that the "high-quality nature" of its portfolio, strong financial position and diverse customer base provided it with the confidence to continue paying a quarterly dividend.
The board declared a quarterly dividend for the period from 1 January to 31 March of 1.5625p per share.
It said it believed that was a conservative level, allowing it to continue to deliver on its business plans, while noting that the duration and effects of Covid-19 disruption could be extended.
The directors said they believed that was in the long-term interests of shareholders.
They added that they would continue to monitor the dividend position for the 2020 financial year, with the potential to increase the quarterly dividend when it had better visibility.
Tritax said it intended to hold its annual general meeting on 13 May as planned, but said that due to the current measures imposed by the government, shareholders would not be permitted to attend in person.
"We face unprecedented times as the Covid-19 pandemic spreads throughout the world," said Tritax's chief executive officer of fund management, Colin Godfrey.
"Our first responsibility is to ensure the health, safety and well-being of the manager's employees.
"We are working closely with the group's customers as a fully engaged and supportive landlord, helping where possible."
Godfrey said frequent communication was being maintained with all stakeholders, to ensure it continued to protect the long-term value of its business.
"The company remains well positioned to navigate a prolonged period of uncertainty and to minimise the potential impact on its business and on its financial performance.
"We have a diverse, high-quality customer base and are working with each tenant to understand any operational impact or cashflow pressure created by the global response to Covid-19.
"All our buildings are currently operational, except for three facilities."
Godfrey said the crisis was bringing into "sharp focus" the need for occupiers to have a "robust, flexible" supply chain and the importance of operating in "prime, well-located" buildings.
"This pandemic may act as a catalyst for change, accelerating the adoption of e-commerce platforms as consumers increasingly shop online.
"This will continue to drive demand for logistics space as occupiers' build in resilience and capacity to limit future potential disruptions."
He explained that, with a lack of visibility on the depth or duration of the crisis, the company was working to ensure that it remained in a "robust position" over the longer term by maintaining its existing strong relationships with customers.
"We are also preserving a well-funded balance sheet by taking a disciplined approach to all non-essential capital expenditure, whilst adopting a conservative stance in relation to our first quarter dividend payment."
At 0935 BST, shares in Tritax Big Box REIT were down 0.41% at 120p.