This article is from the Australian Property Journal archive
GUIDELINES for landlords and tenants outlined in the federal government’s code of conduct for determining rent agreements has prompted APN Industria REIT to withdraw guidance.
The code, to be implemented by the states and territories, will require landlords to reduce their tenant’s rent in proportion to a reduction in trade revenue defined in percentage, via a combination of rent deferrals and waivers over the Covid-19 pandemic period. Tenants with a turnover of $50 million or less and eligible for the JobKeeper program will be eligible.
ADI said “many” of the principles outlined in the code of conduct formed part of its approach with tenants.
“However, the requirement to waive (as opposed to defer) a proportion of rent for tenants eligible for the Federal JobKeeper allowance will likely apply to tenants that would have contributed approximately 10 – 15% of gross income.
“The potential impact of the requirement to waive a proportion of our tenant’s rent is not possible to determine at this time. As a consequence, the Board has determined to withdraw FY20 FFO and DPU guidance,” it said.
The trust has gearing of 28.8%, below the target range of 30% to 40%, and value declines in excess of 45% could be sustained before the gearing covenant would be breached.
Interest cover at 31 December 2019 was 6.7x, and revenue could fall by more than 50% without triggering a breach of the ICR covenant. Refinancing of the $36.25 million facility that had a December 2020 maturity has been completed, and the facility extended by five years, with the facility limit increased by $10 million to $46.25 million.
Undrawn credit lines are now about $49 million.
