Covid guzzles Oryx’s rental income
Analysts agree that the impact of Covid-19 will result in more closed shops and less rental income for Oryx Properties.
Jo-Maré Duddy – Locally-listed Oryx Properties in April granted rental relief of N$9.3 million to tenants in its various properties, which include the Maerua and Gustav Voigts malls in Windhoek.
Despite taking the income knock, none of the group’s financiers have so far granted Oryx any of the formal relief measures available as a result of the Covid-19 impact. These measures are supposed to assist with protecting cash flows and easing the possible financial constraints due to the outbreak of the coronavirus and the subsequent lockdown.
“Oryx is however engaging with all financiers,” the group said in an operational update released on the Namibian Stock Exchange (NSX) yesterday.
Before the lockdown was lifted yesterday, only those tenants classified as essential service providers could continue to trade.
According to PSG Namibia, 67% of Oryx’s property portfolio is retail and 97% of its properties are located locally.
In its results for the six months ended 31 December 2019, Oryx announced that it had concluded a loan facility of N$100 million with Standard Bank Namibia after the reporting period.
This “has not materialised as intended and will impact available facilities,” Oryx said yesterday.
The group is “closely monitoring” tenants who haven’t yet paid their rent for last month. It is also “closely monitoring” vacancies, Oryx said.
Vacancies
“Vacancies remain in line with our half year results with no significant increase,” the group said yesterday.
In their analysis of Oryx’s latest interim results, both IJG Securities and PSG Namibia agree that Covid-19 will impact vacancies and Oryx’s rental income.
“The Covid-19 induced lockdowns are undoubtedly going to add pressure to vacancies going forward,” IJG says.
According to PSG: “As a result of the lockdown restrictions and consideration of the property portfolios composition, we expect that the vacancy rate may be higher by the end of FY20 [2020 financial year] and possibly even higher through FY21 as tenants bear the economic brunt of the current situation.”
Oryx’s latest interim results show its vacancy factor as a percentage of total lettable area increased from 3.2% for the financial year ended 30 June 2019 to 4.3% at the end of December last year. The figure included Oryx’s residential properties for the first time.
“This is to be expected given that economic growth has remained depressed in 2019, putting financial pressure on both consumers and businesses,” IJG says. However, the rate remains relatively low given the adverse economic conditions of the last four years, the analysts add.
Steeledale, industrial property tenants in Windhoek, was put into liquidation after December 2019. Both PSG and IJG say Oryx’s vacancy rate and rental income will be adversely affected if the group can’t find a new tenant.
This property makes up about 0.8% of Oryx’ total lettable area, according to IJG.
PSG forecasts a vacancy rate of 4.5% for Oryx’s full 2020 financial year and expects a factor of 4.75% for the next book-year.
“The Edcon Group (which occupies a large area in Maerua Mall) have already stated that they are unsure whether they will be able to open up the doors to their shops post-lockdown. We expect a number of especially smaller retailers to face the same fate,” IJG says.
The Edcon Group in South Africa last Wednesday said it will file for bankruptcy protection.
IJG says the increase in vacancies for the rest of the year will be dependent on what assistance packages the ministry of finance offers businesses affected by the lockdown, and what sort of deal Oryx manages to reach with its tenants.
Mitigation
Oryx yesterday said it was dealing with all requests from tenants for rent relief as a result of the lockdown regulations during the lockdown period, as well as any additional concerns they might have on a case-by-case basis.
“Several supportive and mutually beneficial options such as rent reductions or extended payment terms are being considered with the intention of recovering these deferrals at a later stage to the extent possible,” Oryx said.
“Our continued focus is to support all our tenants through these times and to assist them to navigate their businesses through the months after the lockdown period ends,” it added.
The lifting of the lockdown from yesterday will allow all Oryx’s tenants to trade again, apart from restaurants (to operate as take-aways), cinemas and gyms.
“This is a positive development for Oryx as our tenants have been negatively impacted during this period and should ease the necessity for rent relief measures,” Oryx said.
The group said it “is making steady progress with rent collection under these difficult times and are actively monitoring our debtors’ balances”.
A credit committee was formed to which all applications for rental concessions or payment deferrals are submitted.
“Oryx remains committed to protecting its cash flow and strengthening its balance sheet with a key focus on managing our gearing and loan maturity,” the group said.
Despite taking the income knock, none of the group’s financiers have so far granted Oryx any of the formal relief measures available as a result of the Covid-19 impact. These measures are supposed to assist with protecting cash flows and easing the possible financial constraints due to the outbreak of the coronavirus and the subsequent lockdown.
“Oryx is however engaging with all financiers,” the group said in an operational update released on the Namibian Stock Exchange (NSX) yesterday.
Before the lockdown was lifted yesterday, only those tenants classified as essential service providers could continue to trade.
According to PSG Namibia, 67% of Oryx’s property portfolio is retail and 97% of its properties are located locally.
In its results for the six months ended 31 December 2019, Oryx announced that it had concluded a loan facility of N$100 million with Standard Bank Namibia after the reporting period.
This “has not materialised as intended and will impact available facilities,” Oryx said yesterday.
The group is “closely monitoring” tenants who haven’t yet paid their rent for last month. It is also “closely monitoring” vacancies, Oryx said.
Vacancies
“Vacancies remain in line with our half year results with no significant increase,” the group said yesterday.
In their analysis of Oryx’s latest interim results, both IJG Securities and PSG Namibia agree that Covid-19 will impact vacancies and Oryx’s rental income.
“The Covid-19 induced lockdowns are undoubtedly going to add pressure to vacancies going forward,” IJG says.
According to PSG: “As a result of the lockdown restrictions and consideration of the property portfolios composition, we expect that the vacancy rate may be higher by the end of FY20 [2020 financial year] and possibly even higher through FY21 as tenants bear the economic brunt of the current situation.”
Oryx’s latest interim results show its vacancy factor as a percentage of total lettable area increased from 3.2% for the financial year ended 30 June 2019 to 4.3% at the end of December last year. The figure included Oryx’s residential properties for the first time.
“This is to be expected given that economic growth has remained depressed in 2019, putting financial pressure on both consumers and businesses,” IJG says. However, the rate remains relatively low given the adverse economic conditions of the last four years, the analysts add.
Steeledale, industrial property tenants in Windhoek, was put into liquidation after December 2019. Both PSG and IJG say Oryx’s vacancy rate and rental income will be adversely affected if the group can’t find a new tenant.
This property makes up about 0.8% of Oryx’ total lettable area, according to IJG.
PSG forecasts a vacancy rate of 4.5% for Oryx’s full 2020 financial year and expects a factor of 4.75% for the next book-year.
“The Edcon Group (which occupies a large area in Maerua Mall) have already stated that they are unsure whether they will be able to open up the doors to their shops post-lockdown. We expect a number of especially smaller retailers to face the same fate,” IJG says.
The Edcon Group in South Africa last Wednesday said it will file for bankruptcy protection.
IJG says the increase in vacancies for the rest of the year will be dependent on what assistance packages the ministry of finance offers businesses affected by the lockdown, and what sort of deal Oryx manages to reach with its tenants.
Mitigation
Oryx yesterday said it was dealing with all requests from tenants for rent relief as a result of the lockdown regulations during the lockdown period, as well as any additional concerns they might have on a case-by-case basis.
“Several supportive and mutually beneficial options such as rent reductions or extended payment terms are being considered with the intention of recovering these deferrals at a later stage to the extent possible,” Oryx said.
“Our continued focus is to support all our tenants through these times and to assist them to navigate their businesses through the months after the lockdown period ends,” it added.
The lifting of the lockdown from yesterday will allow all Oryx’s tenants to trade again, apart from restaurants (to operate as take-aways), cinemas and gyms.
“This is a positive development for Oryx as our tenants have been negatively impacted during this period and should ease the necessity for rent relief measures,” Oryx said.
The group said it “is making steady progress with rent collection under these difficult times and are actively monitoring our debtors’ balances”.
A credit committee was formed to which all applications for rental concessions or payment deferrals are submitted.
“Oryx remains committed to protecting its cash flow and strengthening its balance sheet with a key focus on managing our gearing and loan maturity,” the group said.
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