Retail landlords drop dividends, warn on value uncertainty

Shopping centre giant Unibail-Rodamco-Westfield (URW) has revealed plans to halve its dividend payments for 2019 in a scenario of 'significant uncertainty about the duration and impact of the Covid-19 pandemic on the operations of the group', the firm said in a statement.

While URW originally proposed a dividend of €10.80 per stapled share when it unveiled last year's annual results on 12 February, it will now pay an interim cash dividend of just €5.40 per share to satisfy its REIT dividend distribution obligations, dropping the remaining payment of €5.40.

URW said that the U-turn was due to the fact that 'the Covid-19 pandemic has evolved significantly and at a very rapid pace' since the original announcement. The firm has officially withdrawn its adjusted recurring earnings per stapled share (AREPS) guidance.

'URW continues to focus on the strength of its asset portfolio, its capital allocation priorities and the preservation of its strong liquidity position, in addition to the health and safety of its employees and communities,' the firm continued. 'These are unprecedented times and URW is taking all necessary measures to address these challenges in the best possible manner and prepare the group for the future.'

Meanwhile Shaftesbury, which owns a 15-acre (6 ha) retail portfolio in London's West-End, released a Covid-19 briefing note suggesting that March-end valuations will likely include a statement from valuers highlighting the material uncertainty underlying their independent valuation. This follows a recent RICS guidance note on the same. The firm also notes that it is impossible to guide on EPRA earnings for the year at this stage, but there will be a material adverse impact.

To mitigate the current challenges facing the business, Shaftesbury management has decided to preserve liquidity through declaring no interim dividend at the half year, introduced a moratorium on all non-essential expenditure, new schemes, and acquisitions, and drawn £150 mln (£164 mln) from committed revolving credit facilities. After committed capital and acquisition expenses, SHB has £170 mln in cash and undrawn lines of credit, with a sector leading weighted average debt maturity of 8.8 years.

Property analyst Goodbody notes that valuations for the industry will be tricky for multiple reasons this year, not least due to matters of 'practical difficulty' such as not being able to tour buildings. Due to lack of transactional evidence, the analyst speculates that valuations could be 'desktop only', closely referencing figures for the fourth quarter of last year.