Stan Life property fund cuts divi as tenants fail to pay

Standard Life Aberdeen's HQ in Edinburgh

Standard Life Investments Property Income Trust on Monday became the latest real estate investment trust (REIT) to slash its dividend amid pressure on rent collections.

The £225 million REIT cut its dividend by 40% as it accused some tenants of abusing the system to delay payment.

The fund’s shares fell almost 3%, meaning its share price has now declined about 40% so far this year.

“Several tenants have chosen not to pay and not to engage and they are generally tenants that can afford to pay but are using the current Government protection designed for tenants that cannot pay to delay making any payment,” said the REIT.

“We will continue to chase these companies with vigour.”

On rent collection, the REIT added: “As at close of business on 22 July 2020, the company had received payments reflecting 60% of rents due for what can collectively be termed advance billing for the third quarter of the year; this comprises both old and new English quarter days (24th June and 1st July) and the Scottish quarter day (28th May) …

“At the same date (22nd July), rent due for the second quarter (Scottish quarter day February, 25th March, 1st April, 1st May, 1st June) collection levels stand at a combined 83%.

“It is expected both the Q2 and Q3 figures will continue to improve as we continue to engage with our tenants; something we have always done, but now being more important than ever.

“The aim is to work with our tenants to find mutually suitable solutions to the challenges of COVID-19 on our respective businesses.

“Depending on the situation, the company is agreeing to rental deferments with some tenants with repayment periods to suit the businesses, rent free periods in exchange for amended lease terms (generally an extension of leases) and, in extremis, rental write offs (generally with the smallest tenants who have no means of paying) …”

On dividends, the fund said: “The board recognises the importance of dividends to its shareholders especially when the COVID-19 crisis has forced many companies, across multiple sectors of the economy, to cancel or suspend their dividends.

“The board has taken the decision to maintain a quarterly dividend but at the reduced rate of 60% of last year’s level for this quarter equating to a dividend of 0.714p per share.

“The board is of the opinion that this rate balances the need for shareholders to continue receiving income during this difficult period while maintaining a prudent approach given the rent collection rates presently being experienced for both Quarter 2 and Quarter 3.”

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.