The Financial Sector Conduct Authority (FSCA) has set the cat amongst the pigeons with its decision not to consent to any further dispensation for real estate investments trusts (REITs). That's after already granting them an additional two months to pay distributions to their shareholders over and above the requirement to pay within four months of their year end. Due to the negative impact of Covid-19 on the property sector, the SA REIT Association also wanted leniency on the potential non-payment of distributions.

Under the JSE's listing requirements, REITs are obliged to pay out 75% of distributable earnings to their shareholders. In return for potential relief on distributions, it seems that the FSCA wanted the boards and management of REITs to agree to similar waivers of their bonuses to align with the impact on investors. The JSE said this week that agreement couldn't be reached on the request, which means REITs will have to go ahead with distributions on lose their status.

Fairvest finds itself in the fortunate position that it can pay its distribution due to the resilience of its property portfolio. Investec Property Fund has also come forward with its delayed distribution thanks to the sale of two logistics properties in Belgium, which has helped it reduce its gearing. Teton Property Fund still has time and will make use of the two months' grace granted by the FSCA.

Meanwhile, Grand Parade Investments says the Covid-19 pandemic eroded all the gains it achieved in the first half of its financial year. Despite the setbacks, it says it has made good progress on its value-unlock strategy and remains focused on delivering value to shareholders through the controlled sale of its assets.

There's no DealMakers today due to the shortened week. There will be more merger and acquisitions news next week.

Have a great weekend.

Stephen Gunnion

Managing Editor, InceConnect

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