His explanation chimes with Questor’s views on investment trusts’ reserves, as expressed in one of our recent WhatsApp audio updates, and is worth reporting. “In some years revenue will be added to reserves while in others revenue may be taken from reserves to supplement earned revenue for that year to pay the annual dividend,” Mr Carter said.
“Shareholders should not be surprised or concerned by either outcome as, over time, the company will aim to pay out what the underlying portfolio earns.”
He added that the board “currently intends in 2020 at least to match the dividend payout of 53.5p per share in 2019”, which he expected to entail some use of the reserves “built up over prior years for occasions such as the current crisis”.
At the end of June 2020 the reserves amounted to £69.6m. For comparison, the cash spent on divis paid in the first half (as opposed to those declared) came to £38.2m.
It’s worth noting that much of the poor performance of the shares so far this year is down to a widening in the discount.
Questor says: hold
Share price at close: 948p
Update: Sirius Real Estate
This trust, which owns commercial property in Germany, issued an update last week on its rent collection during the pandemic – a statistic readers will be getting very used to seeing in coverage of our property-heavy portfolio.
At the end of last month the fund had collected 95.9pc of the rent and service charges due for the period between April and June, compared with 98.2pc last year. It said most of the uncollected debt related to 41 tenants out of a total of about 5,000.