Source:iNET BFA, Catalyst Fund Managers, 30 June 2021

As at 30 June 2021, the historical funds available for distribution (FAD) yield for the SAPY was c. 8%. The postponement of dividend payments, implementation of pay-out ratios and the substantial decline in earnings has affected the historical FAD yield for the sector.

Source: Catalyst Fund Managers 30 June 2021

For the 2020 calendar year, we estimate that FAD declined by 27% driven by the impact of Covid-19 on operations (rental concessions, increase in expected credit losses and higher vacancies), as well as negative reversions on renewals due to an oversupply across most subsectors. For the current year, we continue to forecast negative FAD growth impacted by higher vacancies, the continuation of rental discount provisions (albeit at a lower level than 2020) and negative reversions on renewals. The third wave and corresponding return to lockdown restrictions has increased short term earnings uncertainty. Future restrictions and its duration remain a heightened risks for the sector. The impact of ongoing unrest, of which the short term and long-term impact are yet to be full quantified, could further add pressure to the sector.