UK-focused real estate company Atlantic Leaf Properties, which is listed on the JSE, will cut its dividend payout to shareholders in a bid to lower debt and raise cash for acquisitions.
The company said on Monday it had trimmed its distribution guidance by 5% to 9.5p for its year to end-February, as it eyes both new industrial assets and a reduction in its loan-to-value ratio.
The group had previously said it expected full-year distribution of 10p, but had warned in October that this may be lowered. It had paid 9.3p in the year to end-February 2018.
The company, which had a loan-to-value of 48% as of its half-year to end-August, wants to reduce this measure gradually over the next five years.
“UK property companies of a similar size tend to have loan-to-values of between 30% and 40%. As such, we want to bring ours down gradually and one method of doing this is to withhold some of our distribution income,” CEO Paul Leaf-Wright said.
Atlantic Leaf was performing well in the UK’s real estate market where, while retail assets were struggling, office and industrial assets were growing their rental rates healthily, he said.
The company announced on Monday that it had sold an industrial property in the UK for £34m (R663m) and will use most of the proceeds to pursue other industrial assets, while some will be used for debt.
Atlantic Leaf said the transaction would realise a profit of about £4.3m.
“This demonstrates a common theme in the current market where quality assets are achieving selling prices in excess of independent valuations,” the company said.
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