Casting Eye Over Australian-Listed Property Stocks Amidst Pandemic

How important do you feel your homes are right now? More than ever, we believe they are getting significant prominence currently, as you have been confined to them to expedite a pandemic-free world.

COVID 19 has placed the global family in an extremely tricky situation. It is hard to even imagine that homo sapiens are such a vulnerable part of our surrounding, that a mere virus has caused not only health, but businesses and economies to face a disruption- but it’s our current harsh reality.

According to the World Health Organization (WHO), as on 27 March 2020, the novel coronavirus that has impacted 200 countries, globally has over 465.9k confirmed cases and is responsible for more 21k deaths.

However, while the unprecedented war time measures inculcated in economies is adversely impacting personal lives, businesses and stock exchanges, there have appeared few silver linings in these turmoiled times-

• Over 150 countries and territories still have fewer than 100 cases.
• WHO’s COVID-19 Solidarity Response Fund has raised over USD 95 million.
• Governments like that of the US, Australia and India have been declaring proactive stimulus packages (USD 2 trillion, AUD 189 billion and ~ USD 2.1 billion, respectively) to help their respective economies curb the virus repercussions and flatten its curve.
• Candidate vaccines are in preclinical and clinical evaluation.
• The FDA is investigating the use of the drug chloroquine for curing patients with mild-to-moderate COVID-19, with the support of government agencies and academic centers.

GOOD READ- Fighting a Pandemic- Good News from Economies & Stock Markets

Now that we have given you a dose of optimism when most of what you see, hear and discuss is grim and tensed, let’s move on to witness the stance of few Australian listed property stocks, as they fight the COVID 19 battle along with the rest of us-

Cromwell Property Group (ASX:CMW)- DRP Suspension, Dividend Distribution, Virtual Meeting

A diversified real estate investor and manage operative in three continents with a global investor base, CMW announced on 25 March 2020 that it will pay ordinary dividend of $0.01875 to its shareholders (in cash) on 22 May 2020, pertaining to the quarter ending 31 March 2020.

The Company has however decided to suspend the distribution reinvestment plan, given the current market conditions, potential volatility in CMW’s security price in the short term and it being below the per unit NTA.

Besides this, CMW and ARA Asset Management’s Cromwell securityholder meeting due on 30 March 2020 will be held ‘virtually’ through the online platform provided by Link Market Services Limited. The venue is the head office in Brisbane Queensland but will not accommodate all securityholders, as per restrictions imposed by Federal and State Governments on gatherings.

Growthpoint Properties Australia (ASX:GOZ) - Withdrawal of forward-looking statements

Owner and manager of 58 properties across Australia valued at around $4.2 billion, GOZ - an ASX-listed REIT had a strong start to the financial year and was on track to achieve its FY20 FFO/ security as well as DPS guidance.

However, in light of the ongoing uncertainty of the COVID-19 virus, GOZ has decided to withdraw all forward-looking statements, including its FY20 FFO per security and DPS guidance. Currently, the Company’s priority is to protect employees, tenants and the communities in which it operate

However, the robust balance sheet, with undrawn debt lines of $243 million and no debt maturing until FY22 makes GOZ well positioned to face the challenges presented during this unprecedented period, according to MD Timothy Collyer.

Viva Energy REIT (ASX:VVR)- Receives Another Waiver w.r.t Review Event Triggered by VEA

Australia’s largest listed REIT and owner of service station and convenience retail properties across all Australian States and mainland Territories, VVR ecently announced that it had received another waiver in respect of the review event that was prompted by Viva Energy Group Limited (ASX:VEA) selling its 35.5% security holding in VVR-

• Facility terms remain unchanged
• no fees were payable by VVR to secure this waiver
• Requisite waivers from lenders have been received in relation to debt facilities (totaling $976.7 million/ 89% of total debt facilities).

The Company is in discussion with lenders on the remaining $120 million of facilities. It has 60 days (from the date the review event was prompted) to consult for the continuation of these facilities.

If no agreement is made, the relevant lender may give notice and seek repayment in full no earlier than 120 days from the date of that notice. VVR further intimated that it has enough liquidity to deal with these facilities (currently drawn to $45 million).

Centuria Capital Limited (ASX:CNI)- Revised Guidance, Terminated Bid Implementation Agreement

CNI is a specialist investment manager with $7.2 billion worth AUM. Joint CEO John McBain believes that the Company has entered FY21 strongly capitalised and with high recurring revenues. It is set to combat the challenging global financial markets and leverage conditions for the benefit of its investors.

CNI recently provided a market and earnings update with the following highlights-

• Revised forecast operating earnings for FY20 of 11.5 cps
• FY20 distribution guidance of 9.7 cps
• Terminated the bid implementation agreement relating to a proposed bid for Augusta Capital Limited, NZ’s largest listed real estate funds management platforms
• Currently owns $135 million of free cash with operating gearing of 0.4%
• Debt comprises two corporate bonds totaling $170 million (earliest repayment being $90 million in April 2021)

Stock Performance

Now that we have understood the stance of the property companies, let us graze at their recent stock performances, after the close of the ASX trade session on 27 March 2020. On the day, S&P/ASX 200 Real Estate (Sector) settled lower at 2,224, down by over 8.67% (211.1 basis points), relative to the last close. The S&P/ASX 200 A-REIT Equal Weight Index also settled lower by 6.55% at 978.9.

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