With a portfolio of B- and Cgrade properties located in less glamorous areas, ApexHi has clinched an investment grade rating of zaA from CA Ratings.

Many property companies that boast about their prime to A-grade properties in expensive areas will not get close to an investment rating.

CA Ratings says the zaA grade shows ApexHi's strong ability to meet its obligations.

'This is a very good result compared to other corporate entities, but even better given the risks and pressures evident in the property industry,' it says.

CA Ratings highlights ApexHi's strategy of acquiring properties largely in secondary locations. It considers this a strength, saying 'it indicates a good selection of a niche market'.

ApexHi's portfolio is made up of 173 properties with a total market value of about R1,6bn.

The portfolio's gross lettable area comprises 51% office space, 25% retail and 23% industrial.

About 42% of the gross lettable area is located in the major central business districts (CBDs) of SA, with a significant portion in Braamfontein.

ApexHi's MD, Brian Azizollahoff, says there is more to property than location. He says the group focuses more on tenants.

'We are in secondary areas but we do not have secondary tenants,' Azizollahoff says.

When SA's major CBDs were out of favour, big business fled into decentralised commercial areas like Sandton in northern Johannesburg, triggering a frenzy of speculative developments.

Decentralised office nodes, particularly in areas north of Johannesburg, have become oversupplied with new office space and are suffering a high vacancy level. Investors exposed to these areas are taking strain as rents and rental income come tumbling down.

CA Ratings says other factors supporting ApexHi's rating include a strong financial position built on minimal external interest-bearing debt.

ApexHi's external debt-toassets ratio is being maintained at less than 35%.

It says a significant portion of ApexHi's debt funding is at fixed rates.

Constraints on ApexHi's rating include its relatively small size, limited tenant diversification and its concentration in Gauteng.

It seems the old mantra of location, location, location is being rewritten as tenant, tenant, tenant.

ApexHi linked units rose 10c or 1,5% to 670c on the JSE Securities Exchange SA yesterday.

Business Day