Spearhead Property ups its distribution by 13%

Posted On Tuesday, 02 September 2003 02:00 Published by
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Spearhead continues to be one of the top two performers in the JSE listed property sector

Exceeding predictions made at the end of last year, Spearhead Property Holdings, the Cape headquartered property loan stock company, has announced that its year-end results published this week show a 13% increase on the distribution paid per unit. This means that the company has over the last four years provided its shareholders with an annualised return of 38%. Spearhead’s Chief Executive, Mike Flax, quoting data supplied by I-Net Bridge, reports that Spearhead was over the last three years ranked the second top performer out of the 25 on the JSE listed property sector.

Spearhead will be paying a distribution of 142 cents per unit, which comprises a 66 cents per unit interim distribution and a final distribution of 76 cents per unit. The headline earnings per unit have also grown this year, from R1.34 to R1.61, representing a 20% surge.

This is the fourth year in succession since Spearhead listed on the JSE that they have increased their profits and distribution, the average annual increase being in the order of 10%.

"However you measure it, " said Flax, " we are well ahead of most of the companies in our sector as well as the other sectors of the JSE."

Flax commented that the growth in distribution was achieved despite the dilution caused by the issue of a further 4,5 million units towards the end of this financial year.

Flax said that the trading income generated this year had topped R77 million, the highest figure yet achieved in the company’s history. This was "exacted by single-mindedly sweating Spearhead’s property assets" and by continuing to focus on property in the Western Cape.

Major acquisitions of the past year have included

  • Plum Park, an A-Grade office complex in Plumstead housing Group Five, Rabie Property Projects and the Cape headquarters of the estate agency Re-Max.
  • the Ottery Hypermarket, bought for R55,5 million. This complex houses 46 tenants in addition to the Pick ‘n Pay Hypermarket.
  • 129 Beach Road, Mouille Point acquired in partnership with Faircape. A conversion now in progress will make this a sectional title residential complex with 80 units, almost all of which have already been sold.

Also now contributing to the bottom line is Spearhead’s prestigious Business Park on a prime site in Montague Gardens, near Century City. Here letting is ahead of schedule. The completed complex will have 23 000m2 of mixed use space and over 100 tenants.

The performance of the company, repeated Flax, will benefit from the buoyant Cape residential market - and, he said, there are now indications that the demand for retail, office and industrial space will also begin to strengthen, with benefits to Spearhead’s portfolio, which is concentrated in these sectors.

Spearhead’s BEE subsidiary, Lukhanyo-Spearhead Ventures, had a good first year’s trading ending in the black which is unusual for a newly established company of this kind. Lukhanyo’s role is to provide property services, in particular, in the negotiation of leases for private enterprises serving the public sector.

Flax was particularly complimentary about his management’s performance.

"Expenses were tightly controlled throughout the year and came out at R30,9 million which is slightly below the figure we budgeted. Of this expenditure only R5,8 million was for management, head office and listing costs. Spearhead’s management fees cost ratio is the lowest in the industry."

Spearhead unit holders, said Flax, have benefited from the fact that the company "runs its own show".

"We were determined from the start that there was never to be a conflict of interest between a management group and the company they served. At Spearhead the management is independent, heavily invested in the company and has no conflicting loyalties."

Flax himself owns 11% of Spearhead’s units.

"The tight rein held by our management team and our closeness to the operation we run has time and again enabled us to sniff out good deals ahead of the opposition."

Looking ahead Flax predicts that Spearhead should continue to increase its turnover in the coming year and distribution per unit should again rise by between 7 and 13% - "in line with our historical track record".

"Our aim," he said, "is to build up a Western Cape property portfolio worth R1 billion by the end of 2005. Thus far we have been able to meet every target we have set ourselves and I am confident that we can achieve this as well."

For further information please contact Mike Flax on 083 375 0295.


Publisher: Spearhead
Source: Spearhead

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