L2D pays dividend despite crunch

Precinct and retail-focused real estate investment trust (Reit) Liberty Two Degrees (L2D) has stuck to a 100% payout ratio for its financial year ending 31 December 2020, declaring a full-year dividend of 32.33 cents per share on Monday.

The fund, which is the part-owner of flagship properties like Sandton City, Eastgate Shopping Centre and Liberty Midlands Mall, saw its full-year distributions plunging 46.5% in 2020 due to the Covid-19 economic fallout. In 2019, it paid out a final dividend of 60.43 cents per share.

Despite the pandemic blow to earnings, and consequently distributions, L2D maintained a 100% payout on the back of a strong balance sheet.

Its gearing or loan-to-value (LTV) ratio at the end of the financial year stood at 20.5%, one of the lowest levels in the Reit sector.

Most of its JSE-listed property peers have reduced dividend payout ratios to retain cash and thus boost balance sheets in the face of the Covid-19 crunch.

Other Reits that are struggling to keep gearing levels down amid bigger property devaluations, like Redefine Properties and Rebosis Property Fund, have decided not to pay out full-year dividends.

Redefine, which is a much larger and more diversified property counter than locally-focused L2D, has a LTV ratio of over 43%.

Speaking to Moneyweb following the release of L2D’s full-year results, chief executive Amelia Beattie said the group’s low LTV has allowed it to better whether the Covid-19 storm.

“We have deliberately kept our LTV low and it puts us in a good position to get through these uncertain times, despite also facing portfolio devaluations,” she said.

“That’s why L2D has been able to maintain a 100% payout ratio.”

Beattie, however, was reluctant to confirm whether the group would continue paying out 100% of dividends in the next financial year.

Meanwhile, despite the plunge in distribution per share for 2020 and continuing uncertainty due to Covid-19, Beattie seemed a little more optimistic about 2021.

“There were encouraging signs of a recovery in the last quarter of our financial year,” she said. “In fact, Sandton City’s turnover was down just 1.5% in December.”