Oversupply spurs Arrowhead

Posted On Tuesday, 06 December 2011 02:00 Published by eProp Commercial Property News
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The sale of property by larger funds has provided an opportunity for Arrowhead to assert itself in the sector according to Arrowhead CEO, Gerald Leissner.

 

Gerald LeissnerLeissner said that the unbundling by larger funds had provided the opportunity to acquire property and service a section of the market, dealing with units outside high price areas, through their access to equity.

Arrowhead announced that it would list on the Johannesburg Stock Exchange Limited (JSE) on December 9 in the "Real Estate Holdings & Development" sector of the main board with the JSE codes: "AWA" and "AWB".

Redefine-linked unitholders were advised on December 1 that the listing condition, being the registration of transfer from Redefine to Arrowhead of more than half (by market value) of the owned property portfolio, had been fulfilled.

Arrowhead will list 84,839,675 A linked units and 84,839,675 B linked units. The A linked units will cater for more risk averse investors and will earn 60 cents per unit per annum, or 50% of the income distributed per annum, whichever is the greater. B linked units will cater for those investors with a larger risk appetite and will earn the balance of the distributable income estimated to be 38.38 cents per unit for the year ended September 30, 2012. Distributions will be made quarterly.

Arrowhead said that the portfolio would consist of up to 98 properties with a combined gross lettable area (GLA) of 428,000 square metres and is highly diversified across industrial, office and retail sectors with locations across the country from King Williams Town in the Eastern Cape to Klerksdorp in North West.

Leissner added that the properties would be roughly 40% retail, 40% office and 20% industrial. There would be a significant spread across the divisions and through all nine provinces.

He said that the way to manage risk was through size and diversification. Arrowhead would also look to outsourcing. The property management will be done through JHI.

Arrowhead Chief Operating Officer, Mark Kaplan said the properties being acquired brought scale and diversity. "We, together with JHI, our property manager, have an active programme to increase rentals as well as reduce vacancies throughout the portfolio. Furthermore, Arrowhead will identify yield enhancing opportunities through an aggressive income-enhancing acquisitions strategy."

Leissner commented; "Arrowhead will offer investors access to a highly income generative and diversified portfolio through two risk adjusted linked unit classes with quarterly distributions. We will start small and grow the fund aggressively into a serious property player in the South African market."

Arrowhead`s focus will be on identifying opportunities to grow income distributions to Arrowhead linked unitholders. Arrowhead`s management is of the opinion that Arrowhead is well positioned to identify potential income-enhancing acquisitions and to enhance cost savings within the portfolios. The acquisitions will be settled initially through the issue of Arrowhead linked units.

Imraan Suleman, Chief Financial Officer, pointed out that post the listing Arrowhead intends to reduce its current gearing of 47% to under 40% in a relatively short time frame.

The last day to trade in Redefine-linked units on the JSE in order to participate in the unbundling is on Thursday, December 8, 2011. Redefine linked units will trade ex the repayment and the unbundling and Arrowhead linked units will be listed on the JSE from the commencement of trade on Friday, December 9, 2011.

Last modified on Tuesday, 22 April 2014 09:39

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