RE: What changed???17 Oct 2024 19:03
Dividend cover is improving. They went through a period where they were churning assets which meant that EPRA earnings, and in consequence, EPRA dividend cover were always taking a hit until the proceeds could be re-invested into new assets. The market always chose to focus on the (temporary) shortfall in EPRA earnings without giving the managers any credit for generally being able to sell the properties for more than their book NAV and more than cover the EPRA earnings shortfall from realised profits on property sales.
There haven't been many property sales in the last 12 months and the funds realised from previous property sales have now been re-invested. As a result, EPRA earnings and dividend cover have both improved (the market always chose to ignore the lag effect between assets being disposed and new assets being bought).
Over many years now the management have shown themselves capable of repeatedly trading up (selling mature assets and re-investing the proceeds in properties offering better earnings potential). I also like the fact that the managres tend to buy assets with one eye on their alternative use and how they can add value i.e. they aren't wedded to their existing tenant and/or the property's current use. It means that they can take problem tenants in their stride and are always ready to pivot if the need arises e.g. reducing void periods and/or moving into alternative use if necessary.