Source: iNET BFA & Catalyst Fund Managers
Data is as at 31 December 2020

At the end of the year, the historical dividend yield for the SAPY was similar to the 10-year bond of c. 9%. The postponement of dividend payments, implementation of pay-out ratios and the substantial decline in earnings has affected the historical dividend yield for the sector.

Source: Anchor stockbrokers & Catalyst Fund Managers

For 2020, we estimate that funds available for distribution 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 forecast a subdued rebound as the full impact from higher vacancies filter through, the continuation of rental discount provisions (albeit at a lower level than 2020) and negative reversions on renewals. The second wave and corresponding return to lockdown restrictions has increased short term earnings uncertainty. Future restrictions and its duration remain heightened risks for the sector. Distributions and pay-out policies are currently being reviewed by most management teams and we anticipate that the implementation of a reduced pay-out ratio will become the norm.