JSE-listed Octodec has withdrawn its distribution guidance for the financial year to end August 31 owing to the ongoing unpredictability in the market as a result of Covid-19.
Octodec says the business continuity and safety measures put in place in collaboration with City Property Administration, Octodec’s property and asset manager, are delivering as planned.
Essential services to tenants have been maintained across the portfolio while non-essential functions continue to be carried out, albeit remotely.
In accordance with the lockdown regulations, all commercial premises where tenants are classified as trading in non-essential goods and services have closed.
Tenants classified as trading in essential goods or services, in line with the gazetted exemption, remain open and strict hygiene and safety protocols are being followed.
While the full extent of the impact is uncertain, there is an immediate bearing on tenants trading in non-essential goods and services which will affect affordability and their ability to honour rent payments.
Octodec said that within reason, it is committed to assisting its tenants to navigate through this challenging period and is dealing with requests for rental relief on a case-by-case basis, as a tenant retention strategy.
Further, the impact of the pandemic, local economic conditions and unprecedented global financial market uncertainty requires prudent balance sheet management and greater focus on liquidity planning, Octodec says.
With regard to capital management, the company has implemented several measures. This includes halting incurring costs on any new projects and curtailing of expenditure on existing upgrades; and diversification of its source of funders through the recent securing of a three- and four-year term loan facility in the amount of R225-million each with Absa.
Moreover, cash resources and undrawn banking facilities currently available are in excess of R600-million; and the company has extended the interest rate hedging maturity profile and increasing overall swaps as a percentage of debt at favourable interest rates.
“Octodec remains well within all its debt covenants and management is closely monitoring the impact on our covenants in this uncertain environment,” states the company.
Given the current lack of predictability and ability to estimate the overall impact of Covid-19 on future performance, the Octodec board of directors has withdrawn its distribution guidance as previously communicated for the full financial year ending August 31.
The pay-out ratio for distributions will be evaluated in the lead-up to the announcement of the interim results.
Octodec indicated that its results will be announced on April 22, at which time a further update will be provided.