British Land has suspended its dividend and will defer £40m in rents this quarter and spread repayment in response to the coronavirus outbreak.
The firm is deferring March quarter day rents and spreading repayment over the six quarters from September 2020. The financial impact of this is expected to be £40m.
The company added it will release smaller retail, food and beverage and leisure customers from rental obligations until June, which will cost £3m.
To shore up its own financial position British Land is temporarily suspending future dividend payments, including the third quarter dividend due in May.
It has also extended and amended one of its unsecured revolving credit facilities at £450m and has £1.2bn of available cash and undrawn facilities.
The company’s “first ESG revolving RCF” has a headline margin of 90 basis points above Libor and an initial five-year term with a two-year extension subject to banks’ consent.
Until there’s greater clarity on the coronavirus outbreak the group is unable to provide guidance for the coming financial year.
Following the implementation of the lockdown, one of British Land’s retail centres in Lincoln is closed but all others remain open to provide access to essential stores such as supermarkets and pharmacies.
In London, work has been suspended at British Land’s major development schemes at 100 Liverpool Street and 1 Triton Square. British Land said where appropriate, discussions are in place with certain occupiers about delaying taking possession of newly developed office space.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “In theory British Land is still entitled to collect rent, but management have clearly decided that helping crisis hit tenants through the tough times is more important. We think that’s a sensible decision, ensuring there are still shops to open at the end of this comes above a few months’ rent.”
“Having said that it’s going to be a painful ride for investors. The dividend has been suspended, and we could see the estimated value of British Land’s assets permanently impacted.”
Shares are down 2.64 per cent.