Stride Property AGM: pandemic could hit distributable profit by $5.1m

Stride's NorthWest, deserted during level 3 lockdown. Photo / Sylvie Whinray

This year's profit to be distributed by listed real estate specialist Stride Property Group could be hit by up to $5.1 million because of the pandemic, shareholders at today's AGM heard.

Chiefs at the business, which owns properties valued at nearly $1 billion and a third of which is in the retail sector, said the current year's outlook was affected by Covid-19.

Philip Littlewood, chief executive, said: "Stride is working proactively with all tenants to provide support, including sharing of costs through a combination of rental abatements and deferrals. Stride currently expects the financial impact from Covid-19 to result in a reduction of distributable profit for FY21 of between $2.9m and $5.1m."

But that could be partly offset by one-off activity-based income this year which could push up distributable profit by $2.2m to $3.6m.

Tim Storey, chairman, said dividends for FY21 were expected to be static, and the same as for the FY20 year.

The presentation said: "The nature of Covid-19 means there remains uncertainty for the outlook for FY21. The boards will continue to keep shareholders informed during the financial year as the impacts of Covid-19 on the full-year results become more certain."

Stride said it would continue to focus on establishing a group of commercial property products to give growth in its expanding investment management business.

Growth of its Industre, Investore and Diversified businesses are key focuses for the future, it said.

Stride's portfolio is valued at $996.1m and it earned net rental income of $59.1m in FY20. A pie chart shown to investors this morning displayed 32 per cent of Stride's assets in retail shopping centres, 14 per cent in large format retail, 18 per cent in offices and 20 per cent in industrial.

Stride launched its new Industre business on July 1 this year, as its industrial property-focused product.

Industre is a joint venture with a group of international institutional investors, through a special purpose vehicle and advised by J.P. Morgan Asset Management.

It has $398m of properties in its portfolio and has bought or is buying $50m of properties, developing two.

"Industre's vision is to grow its portfolio. JPMAM has allocated $115m of capital for growth initiatives, including recent acquisitions and current developments," today's presentations said.

Stride's assets under management were valued at $2.3b at March 31 this year and Littlewood said the business would grow its property management activities.

If available capital is used, Stride's assets under management would grow to $2.8b, Littlewood said.

Stride is now forging ahead with its funds management entities including related party Industre which has 13 properties valued at $395m. That business is a joint venture with institutional investors via a special purpose vehicle.

Littlewood said a few weeks ago: "Our funds management business, which is our new direction, has grown from managing assets valued at $1.176b to $1.821b in the last year, so it's a growth of $650m which is the delivery of our strategy to grow our external investment management business.

"It's not a new direction. We have been doing this for the last three or four years. It's not directly comparable to Augusta Capital but we're setting up sector-specific investment management funds because we want to establish large, enduring funds. Some are listed now separately, for example, Investore Property. But others like Industre is a private fund," Littlewood said.