GPT, the diversified property trust, has slashed interim distribution 29% for the six months to June thanks to the impact of COVID-19 and lockdowns and massive impairment losses on its property portfolio.
The distribution for the six months to June with 9.90 cents per security, down from 13.11 cents for the first half of 201 9.
That in turn means the company has no hope of matching the 26.48 cents a security distribution for 2019 with the current six-week lockdown in Victoria making doubly sure of that shortfall.
As expected (after an earlier update) GPT Group reported a huge net loss after tax of $519.1 million for the six months to June 30.
The loss was mostly due to the impairment of book values of its shopping centre investments.
The fall in property valuation of $711.3 million as the pandemic and lockdowns closed shopping centres and CBD office buildings earlier in the year and (and again in Victoria at the moment).
The lockdowns cut rents and other income in the half and that a 23.3% slide in GPT’s funds from operations (FFO)to $244.5 million. That meant a FFO per security of 12.55 cents.
Besides lower rentals and fees, the slide in FFO also includes the impact of the application of the commercial tenancies Code of Conduct, mainly for the retail tenants.
That’s the policy introduced after National Cabinet introduced of the commercial tenancy Code of Conduct (Code) requiring landlords to provide rental relief to qualifying tenants impacted by the government measures.
GPT said all its interests in office, towers, shopping centres and industrial warehouses were independently valued during the period, resulting in a devaluation of $711.3 million.
GPT chief executive Bob Johnston said as a consequence of both the challenging environment and the Code, rent collection from our retail tenants fell sharply in the second quarter.
“Negotiations are continuing with our tenants on a case by case basis. The Stage 4 restrictions recently announced by government for Victoria has also created additional uncertainty,” Mr Johnston said.
“We are well placed to navigate through the pandemic period. We have been prudent in the way we have managed the business.”
“We have a strong balance sheet and liquidity of $1.2 billion that ensures that we are also well positioned to continue to execute on our strategy.”
But the next few months and early 2021 are going to be tough times and with a gloomy outlook for retailing running well into 2021, GPT and its peers are going to struggle to match 2019’s performance.
The securities rose half a percent to $3.85.