Big retail landlord Investore Property has benefited from having about 80 per cent of its rental income from “essential business” tenants like Countdown. Investore owns the Countdown property (pictured) on Stoddard Road, Mt Roskill, Auckland.
One of the country’s big retail landlords has escaped most of the impacts of lockdown thanks to having a big proportion of essential business tenants and few tenants with contractual rights to rent abatements.
Investore Property, with 43 mostly large format retail centres worth $895 million, said it was “relatively well-off under Covid” at its virtual annual meeting of shareholders.
The company had a very limited number of tenants with a contractual right to rent abatement and expected rent deals it had done with tenants to cost it $1m to $2m in the year to March 31, 2021. Its net rental income was $48m in the 2020 financial year.
With those of its tenants who could not open and trade during lockdown it had negotiated deals comprising some abatement, deferral of rent and extension of leases and combinations of these.
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The cost of rent deals would be offset by benefits of about $2.2m it would receive from the Government reinstating depreciation deductions on commercial buildings.
It has paid shareholders 7.5 cents a share in the 2020 financial year and intends to pay 7.6c a share in the 2021 financial year.
“We are relatively well-off under Covid 19 and we have indicated to the market with 98 per cent of negotiations completed we expect a gross rental impact negative of $1m to $2m from the current Covid programme,” Investore chairman Mike Alllen said. That assumed alert level 3 and 4 lockdowns were not in place for extended periods in the coming financial year.
Its key tenants are supermarkets with Countdown its biggest tenant providing 63 per cent of its contract rental income. Other big name tenants include Bunnings, The Warehouse, Mitre 10, Briscoes, Foodstuffs, Freedom Furniture and NZ Post.
More than 80 per cent of its contract rental income came from “essential businesses”.
In the past 12 months shareholders of the company have stumped up $105m through two capital raisings to support the company. They also bought $125m of bonds from the company enabling it to pay off some bank debt. Half of Investore’s debt is now from non-bank sources.
The company was in a strong financial position to consider further purchases and was assessing a number of “acquisition opportunities”, the chairman said.
However, there was still a lot of uncertainty around Covid and the situation could change quickly as the Auckland lockdown had shown so the company would continue to monitor that, he said.