This article is from the Australian Property Journal archive
VULNERABILITIES of smaller tenants amid the coronavirus outbreak have forced Australian Unity Office Fund to downgrade its full year funds from operations guidance.
The announcement follows Starwood Capital pulling its takeover bid for AOF after the trust’s refinancing and extension of a debt facility breached terms of the offer.
AOF made provisions against the forecast FY20 rental income, resulting in the funds from operations guidance being revised down from the previously advised 17.3 to 17.7 cents per unit to 16.0 to 17.0 cpu. Full year FY20 distribution guidance is reaffirmed at 16.0 cpu.
Payout ratio is expected to remain within the 80% to 100% target range set.
James Freeman, fund manager of AOF commented said a thorough review of AOF’s portfolio has been conducted in light of the escalating impacts of the COVID-19 pandemic.
“Given some uncertainty, particularly with our smaller tenants, we felt it prudent to make some provisions against our FY20 income profile and as such we have revised our guidance to reflect the rapid economic slowdown that is occurring.
“AOF is primarily an income focused REIT and has no ‘active’ earnings relating to funds management or development fees. AOF’s portfolio remains well positioned with approximately 65% of income underpinned by state and commonwealth government departments, Telstra, Boeing Defence Australia and GE Capital Finance, with no major lease expiries until June 2022.”
Following the refinancing and extension of its debt facility in March, AOF has approximately $40 million of combined cash and undrawn debt facilities with a weighted average debt term of 3.7 years and no debt expiring until October 2022.
March quarterly distribution of 4.0 cpu is expected to be paid on 16 April 2020.