Big shopping centres' owner cancels $55 million of dividends to shareholders and cuts executive pay

Monday, 6 April 2020

Sylvia Park shopping centre owned by Kiwi Property is the country's largest shopping mall. Pictured is an illustration of the Galleria dining precinct at Sylvia Park under construction.

Kiwi Property, one of the country's big shopping centres owners, has cancelled dividends to its shareholders worth $55.3 million to preserve its cash.

Kiwi Property said with the inherent uncertainty surrounding the length of Covid-19's disruption, the company's board decided it need to be prudent with its capital and would not go ahead with the final dividend for the year ended 31 March 2020.

The final dividend was to have been 3.525 cents a share, worth $55.3m to 11,000 shareholders, but will not longer be paid out to them.

The board of directors, chief executive and executive team had agreed to a 20 percent reduction in pay, while in parallel, employee salary increases had also been frozen.

Kiwi Property has expanded Northlands Mall in Christchurch with a new dining and entertainment area.

* 'No access' clauses in commercial property leases may offer rent relief during an emergency**

It was too early to say how much of an impact Covid-19 would have on the company's future income, the value of its properties and on cashflows.

But the impact would be 'material' the company said. Kiwi also has office buildings in its large portfolio of properties, about 70 per cent of which are in Auckland.

A week ago the company also announced it would lose about $6 million in rental revenue from tenants entitled to rental relief in the tenancy leases.

'It is clear the pandemic will have a material impact on the company's forward-looking performance and rental receipts.

'It is too early to quantify the impact of the ongoing period of disruption on future income, asset values and cash flows. Kiwi Property will continue to closely monitor the developing situation and update the market as appropriate,' the compny said.

Kiwi Property had implemented a comprehensive cost savings programme to reduce expenses and help offset any decline in income resulting from measures to control the pandemic.

Non-essential capital expenditure projects had been put on hold until there was greater clarity about the future trading environment.

All operating expenditure had been reviewed and discretionary spending would be stopped where possible. The measures would be reviewed on an ongoing basis as the Covid-19 situation evolves.

Last week It announced it had extended $361m of bank debt facilities on three and five year terms.

It now had no bank debt maturing until the 2023 financial year, $303 million in undrawn credit and a healthy overall gearing position of 29.2 per cent..