Yew Grove REIT plc (LON:YEW), the AIM and Euronext Growth listed regional Irish commercial property investor, today announced its trading update and dividend for the quarter ended 31 March 2020.
Rental collection
Q1 2020 rental collection was robust; Q2 2020 rent, including leases at the recently acquired Millennium Park properties being invoiced for the first time, is being collected in line with expectations and management currently expects that over 95% will be paid on time. The Irish government, FDI and large corporates account for 95.3% of the Group’s contracted rental income, the remaining 4.7% of the rent roll comes from SMEs, of which 0.54% is exposed to non-food retail tenants.
Financing
As at 31 March 2020, the Group’s net debt stood at €32.8 million. After capital commitments, the Group has undrawn loan facilities of €8.7 million and cash on deposit of €7.5 million, providing significant liquidity headroom totalling €16.2 million. In addition, on a pro-forma basis the Group’s portfolio (excluding unfettered properties) would need to fall in value by around €46 million, or 37%, for the LTV covenants in the Group’s borrowing arrangements to come under risk of being breached. Similarly, rental income on these assets would need to fall by 56% for the interest coverage covenant to come under risk of being breached.
Debt metrics
| 31 March 2020 | Covenant | |
| Facility Loan to Value | 32% | 50% |
| Facility Interest coverage (forward) | 6.96x | 3.25x |
| Facility Interest coverage (historical) | 12.59x | 3.25x |
| REIT Cost Cover | 2.48x | 1.60x |
| Debt Maturity | December 2021 | |
| Debt maturity with extension | December 2022 | |
| Total facility size | €49.1 million | |
| Undrawn facility | €8.7 million | |
| Unfettered assets | €11.98 million |
Dividend
On 14 April 2020, the Board of Directors approved the payment of the Company’s first quarterly interim dividend in an amount of 1.20 cents per ordinary share which will be paid (or CREST accounts credited) on 6 May 2020 to shareholders who are on the share register at the close of business on 24 April 2020, with a corresponding ex-dividend date of 23 April 2020. The dividend will comprise a Property Income Distribution (“PID”) of 1.20 cents per share. This dividend is covered by Q1 2020 EPRA earnings. Further dividend payments are expected for the next three quarters of 2020.
Investment and development pipeline
Yew Grove has a substantial pipeline of potential acquisitions, but none have reached the point of legal exchange. All acquisition activity has now been paused until the Company has greater clarity on the likely effect of the Covid-19 pandemic on our market.
Outlook
The economic effect of the Covid-19 crisis is still in its early stages with much of Ireland in self-isolation and many office-based occupiers working remotely. It is too early to say how the developments over the next few months will play out in the Irish commercial real estate market. At present the industrial sector, especially that part involved in the med tech sector and the pharmaceutical supply chain looks robust. In offices, given Ireland’s structural shortage of properties suitable for FDIs and large corporates, especially in the markets served by Yew Grove, the longer-term outlook remains much as it was and is expected to be resilient provided the virus does not cause a deep and more prolonged global downturn.
Jonathan Laredo, Chief Executive Officer, commented:
“Yew Grove was financially well positioned coming into this crisis. The Company has a strong balance sheet and sufficient liquidity to see it through and beyond the likely term of government mandated quarantines. Our portfolio is over 89% let, with the vast majority of our tenants either in businesses that are insulated from, or well able to get through, the effects of government actions to control the spread of contagion. Because of that, our focus has been on working with tenants and occupiers to keep their buildings safe, to understand the business stresses they currently face and to try to ameliorate them where we are able. We continue to monitor opportunities and will look to re-enter the markets when it is sensible to do so.
“The crisis has increased unemployment and reduced income for a large number of people while at the same time Irish charities that support those facing hardship have seen their ability to raise funds severely impacted. As one of the businesses which is still functioning we have a social responsibility and I am pleased to say that both the Company and members of the Yew Grove team are making contributions to help support the charitable effort to alleviate hardship.”
