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Pangbourne turnaround strategy pays off

Posted On Monday, 02 March 2009 02:00 Published by eProp Commercial Property News
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Pangbourne Properties’ turnaround strategy seems to have paid off well.

Barry StuhlerPANGBOURNE Properties’ turnaround strategy seems to have paid off well, according to results released last week.

Pangbourne’s distribution for the six months to December amounted to 63,50c per unit, an increase of 10,43% from the 57,50c per unit distribution for the six months to December 2007.

The distribution for the interim period included R11,4m in development profits and fees, being 4,2% of the distribution, but this amount was significantly lower than the R60m development profits distributed the previous year.

Pangbourne MD Barry Stuhler said it was the board’s stated objective to distribute only recurring property income. He said this would be achieved in the June 2010 financial year.

Although Pangbourne was pleased with the results for the year to December, it said it would keep a close watch on tenant behaviour this year as the property market continued to suffer because of the economic downturn.

Pangbourne had been underperforming the market in the past few years and about a year ago the company embarked on a turnaround strategy that saw it do away with its octopus strategy, which involved it holding strategic stakes in other listed funds such as iFour, Siyathenga and Monyetla. The company decided to streamline its investments and merged with Siyathenga and iFour, while Monyetla was merged with Capital Property Fund.

Pangbourne holds an interest in Capital.

Stuhler said when he and his team took over the management of the fund, it had been mismanaged but now the property portfolio was performing well due to “strict budgeting and an extremely active asset management process”. He said the entire portfolio had been refurbished, and historical maintenance issues had been dealt with in order to retain tenants and attract new ones.

Stuhler said the retention of tenants and management of rental collection was going to be a key issue this year because of property market conditions. He said he had witnessed a growing trend in the market where demand from tenants for large units had dried up. Tenants were now looking for smaller units or were sub-letting.

Stuhler said the company was able to secure a R1,44bn facility from Absa but he emphasised that acquisitions would not be actively pursued until the fund was deriving full benefit from the existing portfolio, and the targeted gearing level of under 40% was achieved. Gearing at the end of the interim period was 40,3%, up from 36,7% in the previous comparable period.

But if the right opportunities arose, Stuhler said, they would be comprehensively explored.

Last modified on Wednesday, 23 April 2014 18:50

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