2nd Apr 2020 08:28
(Alliance News) - Real estate investment trust Segro PLC on Thursday affirmed that it will pay its recently declared dividend and said it would need a big swing in its fortunes to breach in debt covenants.
The FTSE 100 firm said it has GBP1.2 billion in cash and undrawn facilities, with GBP280 million in capital commitments. Segro's added it has "no major" debt maturities before 2023.
"Rental income would have to fall by 80% or asset values by 64% before any debt covenants are breached," Segro added.
Segro will pay its declared 14.4 pence final dividend, it added, bucking the trend of payouts being postponed or even cancelled. The company said that should its May 1 annual general meeting be cancelled, meaning shareholders cannot vote on the final payout, Segro can still pay the dividend as an interim one, which does not need investor approval.
In the early part of 2020, rent roll growth was ahead of internal expectations, with Segro completing new lettings and pre-lets.
The company did confirm that its rental income has taken a slight hit recently however, just 71% of rent due on March 25 has been paid, compared to 96% at the same time last year.
Others like Segro have faced similar headwinds. Land Securities Group PLC on Thursday said it has received just 65% of the rent due before the end of March, compared to 96% in the same time last year.
Segro commented: "Our customer base is highly diverse. Many of them are involved in the supply of critical goods and services to businesses and consumers and some are looking for additional space both for immediate occupation and to prepare for longer term growth once the crisis is over.
"There are, of course, some businesses which are fundamentally sound but who are suffering short term cash flow issues. We are currently working, on a case by case basis, with customers across the Group representing approximately a quarter of our total headline rent regarding appropriate relief, primarily through reprofiling the timing of rental payments."
Segro said a short-term earnings hit is inevitable, but the extent is "currently not possible to quantify".
"The delivery of most development projects scheduled for completion during 2020 will be delayed due to government measures taken to combat the virus, as well as constraints in securing materials and/or labour for our construction sites," Segro added.
Segro shares were 3.7% higher at 767.60 pence each in London on Thursday morning.
By Eric Cunha; [email protected]
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