SEDCO Capital REIT explains details of tenants’ rent revision requests during COVID-19 measures

SEDCO Capital, the fund manager for SEDCO Capital REIT Fund, explained the details of rent revision requests it received from several tenants affected by the COVID-19 precautionary measures, and how it will manage those requests

The fund manager said in a bourse statement that the total value of requests amounted to 14.80% of total annual rents of the fund.

The fund manager said it rejected requests (equivalent to 4.74% of total income), accepted to extend the grace period for a new tenant (equivalent to 0.12% of the total income), and deferred a rent payment equivalent to 0.32% of the total income.

In total, the value of requests received from tenants affected by the precautionary measures is approximately 9.27% of the total income.

The fund manager has not received any contract termination requests as of now, and added that petitions are dealt in a manner to protect the interests of both unitholders as well as tenants.

The fund manager has taken the following actions on the requests received:

- Tenants excluded from precautionary measures were notified of the rejection of the applications received.

- The new tenant who requested to extend the grace period has been notified of the acknowledgement of his request, for a period of no longer than 2 months, to enable him to complete the development of the rented unit.

- Tenants requested to defer their due payments were granted 3 months maximum, and payments will be collected during the fiscal year in which they are due.

- Tenants have been notified that the impact of these actions and the amount of actual damage, if any, will be assessed on a case by case basis, and in accordance with regularity and contractual procedures.

- The fund manager will follow the same procedures with future requests in accordance with the above-mentioned principles.

The fund manager said it aims to maintain the stable distribution of cash dividends as mentioned in the fund’s terms and conditions depending on the rental fee’s receivables.

As precautionary measures are still continuing, the actual financial impact on the fund's distributions cannot be assessed.

The fund manager has taken some initiatives and is considering other measures to mitigate the negative impact on unitholders, such as mentioned below:

- It reduced the annual facility cost, which improved the operational performance of the fund.

- It is considering the possibility of entering into a hedging contract to stabilize the price of SAIBOR and benefit from the current price drop, which will reduce the risk of interest rate fluctuations.

- It is studying the reduction or deference of the fund's operating expenses, which will improve the fund’s performance and increase its liquidity.

- It is studying the possibility of benefiting from the initiatives of the General Authority for Zakat and Income in filing tax returns.

The fund manager is monitoring the situation and will announce any material development in due course.