Spearhead yield beats market expectations

Posted On Tuesday, 02 September 2003 02:00 Published by
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Spearhead reported a 13% increase on the distribution a unit for the financial year to June, which was more than the market was expecting.

Property Reporter

CAPE Town-based Spearhead Property Holdings, the top-performing listed property loan stock company, reported a 13% increase on the distribution a unit for the financial year to June, which was more than the market was expecting.

Spearhead CE Mike Flax attributed the surge partially to the company's increased activity in property development, as well as growth in its core rental earnings.

Spearhead would be paying a distribution of 142c a unit, which consisted of a 66c interim distribution and a final distribution of 76c a unit.

Spearhead reported a net loss of R3,3m for the year, but Flax said that because property loan stock companies distributed all their profits to unit holders there was always going to be either a small loss or profit.

Flax said it had also written off goodwill amortised of R16,4m in "one shot". The goodwill arose on the acquisition of management company Brait Properties at the date of listing.

Angelique de Rauville, MD of listed asset management company Provest, which is part of Investec Bank, said the results were "great for the sector".

"This company's earnings are underpinned by rental income from their quality properties. The major opportunity in terms of growth has come from management taking advantage of good trading opportunities," De Rauville said.

Quoting data supplied by I-Net Bridge, Flax said yesterday that Spearhead had over the past three years also ranked as the second-best performer among the 25 on the JSE Securities Exchange SA's listed property sector.

Flax said that over the past four years Spearhead had provided its shareholders with an annualised return of 38%. Last year the company had a distribution of 125,5c. Core earnings increased 14,5% to 153,24c from 133,86c a unit.

Flax said it was the fourth year in a row since Spearhead listed on the JSE that it had increased its profits and distribution, the average annual increase being about 10%.

Spearhead reported that two Cape Town investment properties had been purchased during the past year, the 30000m² Ottery Hypermarket acquired for R55,5m on a 14% yield and Plum Park, a new office park in Plumstead, acquired for R9,3m on a 13,3% yield.

The company also acquired the 129 Beach Road, Mouillie Point, property for R46m in a joint venture with Faircape Property Developers.

Construction had begun to convert it into 80 luxury, sectional-title beach-front flats.

Sep 02 2003 07:14:40:000AM Nick Wilson Business Day 1st Edition

Publisher: Business Day
Source: Nick Wilson

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