Admirable year for SA property fund.

Posted On Wednesday, 07 May 2003 02:00 Published by eProp Commercial Property News
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Durban - SA Retail Properties had outperformed the property loan stock index on a price basis by 10.5 percent since the start of the year, James Templeton, a property analyst at Barnard Jacobs Mellet (BJM), said yesterday.

James TempletonThe fund was recently derated towards the bottom of BJM's listed property ranking following the rise in its share price from R4.85 at the end of last year to R5.60. It closed at R5.50 yesterday.

Commenting on the results for the year to March, released on Monday, Templeton said the distribution of 62.29c a linked unit was slightly below his 63c forecast. The fund paid a distribution of 24c for the four months from November 15 2001, when it listed, to March last year.

SA Retail reported a 12.5 percent yield on its initial listing price of R5 a unit. Current forward yields on property loan stock companies are averaging 12.7 percent.

The fund posted headline earnings of R97.8 million (R62.29 million) off revenue of R130.8 million (R48.5 million).
Fund manager Peter Sparks said the fund's performance was in line with management's expectations.

"The core portfolio of 26 neighbourhood shopping centres, valued at R886 million, performed admirably in a period of high interest rates, global uncertainty and the limited growth of the South African economy," he said.

The current portfolio vacancy factor is 6.2 percent, which is below the industry benchmark of 7.1 percent but worse than the 5.7 percent factor from November 2001 to March 2002.

Sparks said the retail sector was being buoyed by the government's stimulatory budget, while lower interest rates, which are widely expected in the next 12 months, would further strengthen the retail property sector.

However, Templeton pointed out that falling inflation, which was bad news for retailers, could offset these benefits.

He forecast that an 11.3 percent forward yield would be achieved by the fund this financial year.

Sparks said significant potential acquisitions were being considered, including co-ownership in regional shopping centres generating appropriate yields.

"The objective is to increase the property portfolio to more than R1.2 billion in the short term," he said.

In December, SA Retail acquired an undivided half share of six community-based shopping centres worth R146 million. Westwood Village shopping centre on the East Rand was bought last month for R14.6 million. The centres have an average initial yield of 14 percent.

Sparks said rising shop rents were expected to sustain earnings growth this year.

Last modified on Monday, 05 May 2014 18:39

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