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Dipla goes against the market with a 100% interim dividend, redefinition postpones decision

Monday’s Dipula Income Fund Intermediate results In this year’s listed real estate sector, in addition to paying 100% of the interim dividend, it went against market conditions to increase its distributable income.

Small real estate investment trusts (Reit) outperformed their much larger listed peer, Redefine Properties. Release Semi-annual interim results ending on Tuesday, February 28, 2021.

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Redefine reflected improved performance in some areas, but the fact that distributable income plummeted during the period and the fund chose to postpone the interim dividend decision until the end of the year is quite different from Dipula. In contrast.

Neither fund pays an annual dividend for fiscal year 2020, but Dipla suggests that it may pay it at the end of August 2021.

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Dipula, which has a dual structure of A-shares and B-shares, has declared an interim dividend for the first half of 2021 of 59.02 cents (up 2.9%) for A-shares and 45.09 cents (up 2.9%) for B-shares. 16.8% increase respectively).

The majority of JSE-listed peers either do not pay an interim dividend or introduce a dividend rate (pay a dividend of 75% or higher) to save cash to survive the Covid-19 storm. I chose that.

Dipla’s overall interim distributable profit increased 8.5% to 275 million rants compared to 254 million rants during the comparison period.

The fund also succeeded in reducing the loan-to-value (LTV) ratio from over 46% to 35.7% during the interim period.

Dipula CEO Izak Petersen has admitted to Moneyweb that the fund’s decision not to pay annual dividends for fiscal year 2020 has resulted in a “slight increase” to the latest interim results.

However, he emphasized that it does not undermine the fact that the fund has performed well for six months compared to the listed real estate sector as a whole.

Izak Petersen, CEO of the Diplua Income Fund.Image: Included

“We are pleased with our performance under very stringent trading conditions. Our practical assets and wealth management, combined with our defensive portfolio, are in these unprecedented times. It was a differentiator, “he said.

Listen to Suren Naidoo’s interview with Dipula CEO Izak Petersen (or read the transcript) Here ):

Petersen added that Dipula’s careful balance sheet management helped reduce the fund’s LTV by double digits (11%).

“This strengthened our balance sheet and put us in a position to overcome these difficult times and pay our shareholders an interim dividend,” he said.

Keiren Ndrov, head of a listed real estate fund in Stanlib, told Moneyweb that Dipla is one of the most undervalued REITs in the sector.

“Most indicators are supported by the sector or have high scores, except that they are one of the few REITs that pay 100% of their distributable income and record an increase in distribution. 36% lower LTV than 42%, “he explains.

“Dipla also has a healthy ICR (Interest Coverage Ratio) of more than three times, and its net asset value is increasing, but the sector is reporting a decrease,” he said.

“But what discourages Dipla is the size and liquidity of its shares,” Ndrob adds.

Meanwhile, Redefine reported that distributable earnings per share fell by 21.8% in the interim period, plummeting from 33.46 cents in the previous corresponding period to 26.18 cents per share.

The Group did not pay the annual dividend for fiscal year 2020 and postponed the interim dividend for the first half of this fiscal year, but Redefine has indicated that it will pay the final dividend for 2021.

In the interim results, the fund stated in a Sens statement: “Provides additional flexibility to the company given the extraordinary uncertainty of the impact of the Covid-19 pandemic, the impact of Redefine on operations, the liquidity and LTV ratio, and the future impact on the company and the board of directors. Resolves to postpone the dividend declaration decision until the results of the fiscal year ending August 31, 2021 scheduled for November 2021 are announced as a precautionary measure to increase liquidity. did.

“Redefine is expected to be in a position to pay dividends for fiscal year 2021 subject to the liquidity and solvency tests required by the Companies Act at the time of the dividend declaration,” he added.

Redefining CEO Andrew Konig said the fund did not make a decision to lightly postpone the interim dividend.

“We have taken into account the interests of all stakeholders. Paying dividends is the basis of our investment proposal, but unfortunately there is too much uncertainty to take into account at this time. We hope to receive better news towards the end of the year, but we need to act cautiously as usual, “he said.

Andrew Konig, CEO of Redefine Properties. Image: Moneyweb

According to Konig, continued Covid-19 pressure helped reduce Redefine’s six-month distributable income, while the fact that the group sold about 4.8 billion rand of real estate also affected.

Offshore funds have acted to maintain their own financial flexibility and increase liquidity in the light of Covid-19, resulting in dividends from a 45.4% holding of Redefine in the Poland-based EPP. did not do it.

The redefinition disposition is part of the fund’s stated mission to reduce LTV and strengthen its balance sheet in the face of a pandemic.

Reit has made progress in this regard, reducing LTV from 47.5% in fiscal year 2020, which ends August 31, to 44.3% by the end of the interim period (until February 28, 2021). The ultimate goal of the redefinition is to reduce the gearing level to less than 40%.

Listen to Simon Brown’s interview on Redefine with Garrets Elston of Reitway Global. I haven’t paid the 2020 dividend.

Dipla goes against the market with a 100% interim dividend, redefinition postpones decision

Source link Dipla goes against the market with a 100% interim dividend, redefinition postpones decision

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