Investec Australia Property Fund delivers on listing objectives

Posted On Thursday, 22 May 2014 11:32 Published by
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The Investec Australia Property Fund ("IAPF") listed on the main board of the JSE on 23 October 2013.

Graeme Katz

From the date of listing to its year end, IAPF has delivered a total rand return to its investors of 26%, outperforming its locally inward listed and Australian peers.

This performance is underpinned by the strength of the portfolio's real estate fundamentals, cost containment and the efficient management of capital and interest rates, which positions IAPF well to continue to deliver long term capital and sustainable income growth to investors.

IAPF CEO Graeme Katz said: "We are particularly pleased with the performance during this period and the delivery of a strong first set of results since listing. Importantly, these results have beaten our PLS expectations and reinforce our investment strategy of investing in high-quality properties situated in key metropolitan areas. We continue to seek growth and diversification opportunities that enhance unitholder value and contribute to sustainable income growth."

In line with its strategy of investing in high quality properties, IAPF has completed two post-listing acquisitions with a total value of AUD 46.8 million. Both buildings are A-grade office properties located in key metropolitan areas, with weighted average lease expiry profiles of 6.2 years and 9 years respectively, A grade tenants, attractive contractual escalations and 100% occupancy.

The acquisitions have been funded with existing debt facilities at an all in fixed funding cost of 4.69%. This locks in the positive yield spread in excess of 2% which is a unique and attractive dynamic in Australia versus other global property markets. Post the acquisitions IAPF's gearing will be 26.8% which still provides head room for future growth.

Commenting on IAPF's future prospects Katz said: "Based on the strength of the property portfolio IAPF is well positioned to continue delivering on its strategy and is expected to perform in line with forecasts provided in the PLS. Whilst yields have compressed since the listing of IAPF due to strong investor demand for quality assets, IAPF has a pipeline of acquisition opportunities consisting of both on and off market transactions, which in the current favourable interest rate environment can be funded at attractive pricing."

 

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