U+I has reduced collective executive director pay by 50% for three months, among a series of wider cost-saving measures including a redundancy programme and furloughs.
The developer said it had accelerated its cost efficiencies programme to offset the economic uncertainty created by the Covid-19 pandemic, and the impact of stopping and deferring development expenditure.
The company has cut back non-executive director pay by 25% for the next three months, and is consulting with senior staff about a 10% reduction.
Discretionary bonus payments for the 2020 financial year have also been cancelled, with executive directors waiving their contractual bonus entitlements.
It said it had also taken “immediate steps” to make cost savings through a redundancy programme, which will deliver annualised savings of £1.4m. In addition, 17 members of the team have been furloughed.
U+I has cut its gross development and trading gains target of £35m-£45m for the year to £16m.
Future dividend payments are temporarily suspended.
The developer said it could withstand a further fall in overall capital values of the assets in its investment portfolio of around 25% before requiring renegotiation of LTV covenants with its lenders.
It expects to reduce development expenditure of around £30m over the coming year.
U+I said it would have more than £45m free and £26m restricted cash available, including £15m cash to be drawn against previously uncharged assets.
Matthew Weiner, chief executive, said: “2020 started with a strong sense of confidence, which has been disappointingly short lived as we now experience the impact of Covid-19.”
He added: “In the short term, we have taken decisive action to preserve cash and mitigate the impact of Covid-19, on both our people and our projects. We have also made the decision to bring forward the efficiencies programme we announced in October 2019, which will result in £1.4 million of savings this year.
“Over the coming months these cost reductions will strengthen the fundamentals of the business and enable U+I to deliver on its pipeline through a more efficient approach.
“We are committed to working with our tenants during this difficult period, and our contingency planning is in place and working effectively to ensure business continuity.”
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