IN line with its expectations, ApexHi Properties has reported a distribution of 105,5 cents for the six months ended December 2003. Investors who hold A units will receive a distribution of 51 cents per unit, while those who hold B units will receive 54,5 cents per unit. This represents a total distributable income of R151,8-million for the six months. Half of this distribution was paid in the first quarter.

Following on from its consistent performance in both the first and second quarters, the company expects performance in the second half to be similar.

Trading volumes have in the units have been very satisfactory, with more than 47,6-million of the A units and 50,9-million of the B units changing hands. This equated to 33% and 35% of the weighted average units currently in issue respectively.

During the period under review, ApexHi acquired 14 properties and disposed of two others. The company has also entered into an agreement to purchase a further 14 properties from Shops for Africa for a consideration of R415-million. This deal is still subject to unit-holder approval and will be settled through a combination of cash and units.

The company’s property portfolio currently includes 221 properties valued at R2,4-billion, and represents a total gross lettable area of over 1.7-million square meters. Chief Executive, Gerald Leissner, says the Shops for Africa transaction made sound strategic sense and met a number of key objectives. “It will be revenue enhancing, reduce our risk by enhancing the size, diversity and geographical footprint of the overall portfolio and lower our exposure to office space. As a result of the transaction, the retail component of the portfolio will increase from 25% to 31%,” he says.

During the period ApexHi raised R136-million in cash through the placing of 9,6-million A and B units pursuant to a general authority to sell units for cash. The money will be used to settle part of the purchase price payable in respect of the Shops for Africa acquisition. The balance will be used to fund other transactions.
Approximately 69% of current the portfolio is let to A-grade tenants, including government departments, parastatal organisations and major listed companies. Properties located in the CBDs of Johannesburg, Pretoria and Durban represent 45% of the total lettable area. The portfolio is 15% vacant.

During the six months leases covering 133 522 square meters were concluded. Of these, 99 137 square meters or 72% comprised renewals. The balance was made up of new leases.

Leissner is confident that ApexHi's growing and increasingly diversified portfolio should benefit from the improving fundamentals in the property market as well as lower interest rates. In October the company renegotiated its interest rates resulting in a reduced weighted average all inclusive rate of 12,68%. Borrowings at R711,5-million equate to 30% of the value of the property portfolio and interest rates have been fixed on 84% of these borrowings.

Leissner believes that improved property fundamentals and sound risk management will continue to drive selected listed property prices in 2004, generating returns to investors at acceptable levels when compared with other investments.