IAPF delivers financial result in line with guidance and announces ASX listing

Posted On Monday, 06 May 2019 14:42 Published by
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Investec Australia Property Fund (IAPF or the Fund) is pleased to announce a final distribution of 5.18 cents per unit (cpu) pre-withholding tax (WHT) and 4.75 cpu post-WHT (2018: 5.08 cpu pre-WHT and 4.65 cpu post-WHT).

-GRAEME-KATZ-

This brings the total distribution for the year to 10.23 cpu pre-WHT and 9.40 cpu post-WHT (2018: 10.03 cpu pre-WHT and 9.29 cpu post-WHT) and represents growth for the full year of 2.0% pre-WHT and 1.2% post-WHT, which is in line with guidance given to the market.

The financial result reflects the Fund’s strategy of acquiring properties in established office or industrial precincts supported by key infrastructure, optimising returns through active asset management and the efficient management of the balance sheet and interest rates.

During the year, management focused on engagement with tenants in an effort to agree lease extensions in advance of contractual expiry dates in order to secure the Fund’s medium to long term revenue. Commenting on the leasing activity for the year, IAPF CEO Graeme Katz said: “We are continually looking at ways to improve the tenant experience, whether by improving our management processes or investing in the portfolio through planned or discretionary capital expenditure. Ensuring our portfolio remains relevant and understanding users’ occupancy requirements is critical in retaining existing tenants and attracting new tenants which ultimately drives revenue growth. During the year we entered into leases over approximately 12%ª of the portfolio with only 1 417m² remaining vacant and 48% of leases expiring after five years.

The Fund’s portfolio now comprises 28 assets valued at AUD 1 063 million. IAPF’s gearing ratio as at 31 March 2019 increased to 38.1%, primarily as a result of the acquisitions made during the year.

The Fund also announced that it is pursuing an ASX listing and associated capital raising and has issued a product disclosure statement in this regard. The ASX listing and associated capital raising, which aims to raise approximately AUD 100 million through the issue of 76.9 million new units (Offer)°, is being undertaken in accordance with the approvals received from unitholders in September 2018. Following the ASX listing, the Fund will delist from the BSX and will be dual primary listed on the JSE and ASX.

“Following the recent acquisition of 24 Wormald Street in Canberra, and given the current favourable conditions in the Australian REIT market, Investec Property Limited as responsible entity of the Fund has decided to pursue the ASX listing and associated capital raising. The proceeds from the capital raising will be used to repay debt and pay the costs associated with the offer, and will result in the Fund’s gearing reducing to approximately 29%ⁿ. If the ASX listing proceeds, the Fund will be dual primary listed on both the ASX and the JSE. We believe this is an important strategic initiative which will provide the Fund with a more diversified pool of capital to allow it to grow and diversify its property portfolio,” added Katz.

In light of the proposed ASX listing and Offer, the Fund is also pleased to announce a special distribution of 1.59 cpu pre-WHT and 1.46 cpu post-WHT on existing units for the period 1 April 2019 to 27 May 2019, being the date on which settlement of the new units issued pursuant to the Offer is expected to occur. The Fund’s first distribution following the ASX listing is expected to be for the period from 28 May 2019 to 30 September 2019.
The Offer comprises a broker firm offer and institutional offer.

The broker firm offer is expected to open on Monday, 13 May 2019 and close on Monday, 20 May 2019 with the institutional offer and bookbuild being conducted on Monday, 20 May 2019 and Tuesday, 21 May 2019. The final subscription price and allocation of new units will be announced on Tuesday, 21 May 2019. New units issued pursuant to Offer are expected to commence trading on the JSE on Monday, 27 May 2019 (Johannesburg time), and on the ASX on Tuesday, 28 May 2019 (Sydney time), initially on a deferred settlement basis.

Highlights

  • AUD 1 063 million total portfolio value
  • Attractive portfolio comprising 28 properties supported by strong underlying property fundamentals and an established track record of delivering on strategic objectives
  • AUD 49.2 million of property acquisitions during the year
  • 99.4%* occupancy at 31 March 2019, up from 98.5%* at 31 March 2018
  • Long WALE of 4.7 years* with 48%* of leases expiring after five years
  • 88.9%^ total return in ZAR since listing
  • Total distribution of 10.23 cents per unit pre-withholding tax – growth of 2.0% in AUD
  • Strong balance sheet management - 3.75% all in funding rate; 77.5% hedged for 7.2 years
  • ASX listing and associated capital raising° announced, seeking to raise approximately AUD 100 million
Last modified on Monday, 06 May 2019 14:51

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