Property giant British Land Company Plc is reinstating its dividend despite taking an £11.6million hit from tenants going into administration or CVAs.
The company, where bosses took a 20% pay cut at the start of the coronavirus lockdown, suspended dividend payments in March 2020. Two months later it announced losses of £1.1billion.
But now it is in better shape and following the latest quarter date for rental payments on 29 September 29, and ahead of its half year results announcement, it told investors that 86% of its tenant stores are now open and footfall is 21% ahead of benchmark, with retailer sales 90% of the same period last year.
The company's huge portfolio includes Meadowhall shopping centre in Sheffield, the Broadgate Estate development in London, and the Drake Circus Shopping Centre and neighbouring The Barcode leisure complex in Plymouth.
It owns Debenhams stores including those in Cardiff and Chester and retail parks across the country including Mostyn Champneys in Llandudno.
And it told the stock market that it is such open air, out-of-town retail parks which are driving its outperformance and therefore dividend payments will resume and be paid semi-annually at 80% of underlying earnings per share.
A statement to the stock market said: “Like many businesses, we continue to face challenges as a result of the Covid-19 pandemic, but we also recognise the importance of the dividend to shareholders.
“We benefit from the strong financial position we have established over several years, a unique and world-class portfolio of real estate and are reassured by the improving operational performance of our assets over recent months.
“As a result, the board are pleased to announce that the dividend will resume. Going forward, dividends will be paid semi-annually, as opposed to quarterly. Dividends will be announced at the time of our interim and full year results, with payments made to shareholders in February and August.”
Meanwhile, British Land also revealed that since April there has been an increase in CVAs (company voluntary arrangements) and administrations across the retail market and it has a further 16 occupiers operating under such circumstances accounting for 80 units.
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Of these, 13 units have closed, 62 have seen reduced rents and five remain unaffected. Overall, this has resulted in a £11.6million reduction in annualised rents the firm said.
It also said it remains in active discussions with retail occupiers about the payment of rent. This has led to an increase in rent collection for the June quarter which now stands at 74%.
It said £96million of rent was due for payment at the September quarter, comprising £51millon in retail and £45million in offices.
By October 8 it had collected 69% of the that, comprising 91% of offices rent and 50% of retail rent. This compares to the collection rate of 36% for retail reported in the week after the June quarter date.
“In a similar manner to the June quarter, we expect September quarter rent collection to improve further over the coming weeks,” the statement said.
The statement added: !All of our retail assets are open and, as of October 1, 86% of our stores are open (1,470 units).
“In September, footfall was 84% of the same period last year, which represents a continuation of the consistent improvement in footfall we have seen since the re-opening of non-essential retail in June.
“Encouragingly, like-for-like retail sales in September for stores that were open were 90% of the same period last year. We are delivering clear outperformance versus the wider market with footfall 21% ahead of the benchmark.”
And it stressed 48% of retail assets are out-of-town retail parks which are “playing a key role in retailers' post-lockdown reopening strategies” and we are continuing to deliver outperformance.
“Our retail parks are well connected and affordable to retailers meaning they play an important role in a successful online retail strategy facilitating click-and-collect and enabling returns as well as supporting mission-based shopping,” the statement said.
“We have seen this trend accelerate, as rates of online shopping have increased, with shoppers more confident visiting open-air locations they can access by car and where social distancing can be more easily managed.
“As a result, in September, footfall on our retail parks was 89% of the same period last year and like-for-like sales for stores that were open were 93% of the same period last year with strong performances from Giltbrook in Nottingham, Mayflower in Basildon and Nugent in Orpington”
