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Land Securities - Update on June rent collection posted on Company News Board

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idpickering
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Land Securities - Update on June rent collection posted on Company News Board

#323445

Postby idpickering » July 3rd, 2020, 7:15 am

Here; viewtopic.php?p=323444#p323444

nb, the item includes this comment that may be of interest to HYPers;

Balance sheet and dividend

Landsec remains in a financially robust position. At 30 June 2020, our adjusted net debt was £3.92bn compared with £3.93bn at 31 March 2020, pro-forma group LTV was 30.6% using March 2020 valuations (31 March 2020: 30.7%), and we had £1.20bn of cash and available facilities.

The Board has reviewed the position on future dividend payments and intends to reinstate payments following the half-yearly results announcement on 10 November 2020. The size and timing of our interim dividend will be confirmed with the publication of the half-yearly results.


Ian.

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Re: Land Securities - Update on June rent collection posted on Company News Board

#323510

Postby monabri » July 3rd, 2020, 12:35 pm

Are Land Securities the first company to announce a resumption of dividends (albeit unspecified)?

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Re: Land Securities - Update on June rent collection posted on Company News Board

#323515

Postby Dod101 » July 3rd, 2020, 1:10 pm

monabri wrote:Are Land Securities the first company to announce a resumption of dividends (albeit unspecified)?


As far as I know they are but as I said (probably on the other thread) they really have no option. As a REIT they are obliged to pay 90% of their rental income as a dividend in order to retain the status so I am not sure that I would regard that as a guide for other companies. Maybe a straw in the wind though.

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Re: Land Securities - Update on June rent collection posted on Company News Board

#323539

Postby PinkDalek » July 3rd, 2020, 3:27 pm

Dod101 wrote:As far as I know they are but as I said (probably on the other thread) they really have no option. ...


I've replied over there Company Share news (LSE Main Market) as they did/do have an option, as explained in the 31 March 2020 results (if I include the extracts here, this information will disappear in effect, as there's usually a new thread on this particular board each time there's a new RNS, making it much harder to find what has already been written previously on the subject).

viewtopic.php?p=323538#p323538

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Re: Land Securities - Update on June rent collection posted on Company News Board

#323568

Postby Gengulphus » July 3rd, 2020, 5:12 pm

monabri wrote:Are Land Securities the first company to announce a resumption of dividends (albeit unspecified)?

No, because they haven't announced a resumption of dividends - they've announced an intention to resume dividends. And the fact that they're leaving the size of the interim dividend unspecified means that it might be zero...

All of which is very sensible of them IMHO: if you think how much the situation has changed in the last four months, announcing anything firm about what they'll do in November would be offering a massive hostage to fortune!

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Re: Land Securities - Update on June rent collection posted on Company News Board

#323576

Postby Dod101 » July 3rd, 2020, 5:39 pm

I think from the fact that they tell us they have reviewed and intend to reinstate the dividend at the time of their half year results is a good indication that it is unlikely to be a nil declaration, especially as they are a REIT and have certain distribution obligations as such.

Dod

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Re: Land Securities - Update on June rent collection posted on Company News Board

#323579

Postby Gengulphus » July 3rd, 2020, 6:08 pm

Dod101 wrote:I think from the fact that they tell us they have reviewed and intend to reinstate the dividend at the time of their half year results is a good indication that it is unlikely to be a nil declaration, especially as they are a REIT and have certain distribution obligations as such.

I don't think anyone (including them) can say how likely it is that they'll be in a position to reinstate dividends in November - too much depends on events beyond their control, such as whether we experience a major second wave of COVID-19, whether those who rent properties from them are in a position to pay their rent, etc. The most they can do is look at how they think things will go, project what their financial position will be if things go that way (or reasonably close to it), decide that they anticipate being in a position to pay a dividend if that happens, and base their announced intentions on that.

Or put another way, I think the announcement will be based on a decision that it's highly likely that either they'll be able to pay an interim dividend or they'll be able to point to something that's happened and plausibly say "that was unexpected and has forced us to change our intention". How likely each of those two alternatives is, I don't think anyone can judge.

Gengulphus

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Re: Land Securities - Update on June rent collection posted on Company News Board

#323676

Postby dealtn » July 4th, 2020, 10:48 am

Gengulphus wrote:
Dod101 wrote:I think from the fact that they tell us they have reviewed and intend to reinstate the dividend at the time of their half year results is a good indication that it is unlikely to be a nil declaration, especially as they are a REIT and have certain distribution obligations as such.

I don't think anyone (including them) can say how likely it is that they'll be in a position to reinstate dividends in November - too much depends on events beyond their control, such as whether we experience a major second wave of COVID-19, whether those who rent properties from them are in a position to pay their rent, etc. The most they can do is look at how they think things will go, project what their financial position will be if things go that way (or reasonably close to it), decide that they anticipate being in a position to pay a dividend if that happens, and base their announced intentions on that.

Or put another way, I think the announcement will be based on a decision that it's highly likely that either they'll be able to pay an interim dividend or they'll be able to point to something that's happened and plausibly say "that was unexpected and has forced us to change our intention". How likely each of those two alternatives is, I don't think anyone can judge.

Gengulphus


I disagree. They will want to maintain their REIT status, as will the vast majority of other REITs. Given LAND are a long way from being the least able to pay a dividend from their available resources they only won't if the REIT rules and obligations are (temporarily?) altered to allow non-payment. This will most likely only happen through industry wide consultation with the Government and HMRC.

So, if they don't pay, it wouldn't be "forced us to change our intention" but "in line with the REIT industry we are taking advantage of the new (temporary) relaxations of REIT obligations to preserve cash flow..."

Personally I think they will pay the minimum necessary to maintain REIT status, and that REIT rules won't change. But we will have to see.

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Re: Land Securities - Update on June rent collection posted on Company News Board

#323709

Postby Gengulphus » July 4th, 2020, 1:24 pm

dealtn wrote:
Gengulphus wrote:
Dod101 wrote:I think from the fact that they tell us they have reviewed and intend to reinstate the dividend at the time of their half year results is a good indication that it is unlikely to be a nil declaration, especially as they are a REIT and have certain distribution obligations as such.

I don't think anyone (including them) can say how likely it is that they'll be in a position to reinstate dividends in November - too much depends on events beyond their control, such as whether we experience a major second wave of COVID-19, whether those who rent properties from them are in a position to pay their rent, etc. The most they can do is look at how they think things will go, project what their financial position will be if things go that way (or reasonably close to it), decide that they anticipate being in a position to pay a dividend if that happens, and base their announced intentions on that.

Or put another way, I think the announcement will be based on a decision that it's highly likely that either they'll be able to pay an interim dividend or they'll be able to point to something that's happened and plausibly say "that was unexpected and has forced us to change our intention". How likely each of those two alternatives is, I don't think anyone can judge.

I disagree. They will want to maintain their REIT status, as will the vast majority of other REITs. Given LAND are a long way from being the least able to pay a dividend from their available resources they only won't if the REIT rules and obligations are (temporarily?) altered to allow non-payment. This will most likely only happen through industry wide consultation with the Government and HMRC.

So, if they don't pay, it wouldn't be "forced us to change our intention" but "in line with the REIT industry we are taking advantage of the new (temporary) relaxations of REIT obligations to preserve cash flow..."

Personally I think they will pay the minimum necessary to maintain REIT status, and that REIT rules won't change. But we will have to see.

None of that is disagreeing with me - you're simply suggesting another way that non-payment of an interim dividend might be justified, one which doesn't necessarily depend on some further major adverse event happening. And I agree that it could plausibly happen that way. However, their annual results (released on May 12th) said "While the Group is confident it will continue to satisfy the requirements for REIT status, our discussions with HMRC indicate that they are likely to make allowance for any Covid-19 related breach of these requirements by REITs." That suggests to me that if no such event happens, i.e. things go as they expect/hope, then they'll pay the amount they need to as an interim dividend as the clearest way of maintaining REIT status and so won't need to rely on any allowances being made by HMRC. And if such an event does happen, they'll be able to say "that was unexpected and has forced us to change our intention" and probably also "fortunately, HMRC are making allowances for this, so that we're not losing REIT status". I.e. I think the possibility you suggest and the possibility I suggest go largely hand in hand, though I'm not ruling out either combination of one happening and the other not.

That still doesn't resolve the question of whether payment of an interim dividend is likely, unlikely, or somewhere inbetween. And I stick to my point that I don't think anyone is in a position to answer that question at present - November is just too far away and there are far too many major adverse events that might or might not happen before them. I'm not going to agree with your thought that they'll pay the minimum needed to maintain REIT status, neither am I going to disagree with it - I simply have no idea what the outcome will be, and no hope that I will have an idea about it until a lot closer to the time. As you say, we will have to see.

Gengulphus

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Re: Land Securities - Update on June rent collection posted on Company News Board

#323719

Postby dealtn » July 4th, 2020, 2:06 pm

Maybe it wasn't clear (as we are basically agreeing with each other), it was the "plausibly say" that I think unlikely. I don't think they will publically say anything like that. They will either pay a dividend sufficient to nmaintain REIT status, or not pay (along with the rest of the industry having sought and received guidance from HMRC), but use language along those lines. They won't be forced, nor claim to have been forced, to do anything.

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Re: Land Securities - Update on June rent collection posted on Company News Board

#323855

Postby Gengulphus » July 5th, 2020, 11:17 am

dealtn wrote:Maybe it wasn't clear (as we are basically agreeing with each other), it was the "plausibly say" that I think unlikely. I don't think they will publically say anything like that. They will either pay a dividend sufficient to nmaintain REIT status, or not pay (along with the rest of the industry having sought and received guidance from HMRC), but use language along those lines. They won't be forced, nor claim to have been forced, to do anything.

Ah, OK - yes, I admit I didn't try to translate my wording into directorspeak! They would very likely say something like "in the current circumstances, it is prudent to reconsider our intention announced on 3 July 2020 to pay an interim dividend" rather than use words like "forced" that suggest they're not in control...

Gengulphus


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