A-Prop's distribution down slightly

Posted On Monday, 30 August 2004 02:00 Published by eProp Commercial Property News
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LISTED property loan stock company Arnold Property Fund (AProp) announced yesterday a total distribution of 11,5c to unitholders for the year to June 30 2004, which was slightly lower than the 14,27c distributed the previous year.


Property-Housing-ResidentialA-Prop executive director Michael Aitken said the drop stemmed primarily from the unwinding of the company's fixing of interest rates on its borrowings part of a restructuring strategy.

" We anticipate similar returns in the year ahead. It (A-Prop) has been stabilised and we are moving forward and year on year we will see improvement in the prospects of A-Prop," he said .

Negotiations are under way to buy a R312m property portfolio from Momentum Property Investments. The proposed acquisition will boost the fund's portfolio over the R1bn mark, and the issue of new linked units to Momentum as payment for the properties will significantly raise its market capitalisation and reduce its borrowings.

He said A-Prop would also be paying interest on its debt for only the next two years and had fixed favourable interest rates.

A-Prop has been stabilised by new fund manager Corovest.

Corovest was appointed last year at the behest of the company's major unitholders following the substantial loss in value of linked units and decline in net asset value since listing. Aitken is an executive director of Corovest.

A subcommittee was appointed to investigate the loss in value, and concluded in February this year that deficient or ineffectual due-diligence processes, among other factors, resulted in the overvaluation of acquisitions.

It also found that there were instances where obligations to the fund in terms of warranties had not been met.

A-Prop said it had consulted its attorneys, and that claims against certain vendors (sellers of property) had been resolved in favour of the group.

Aitken said the claims against the vendors related to rental guarantees around which there had been disputes. "There are other potential claims we have against vendors that we are still pursuing," he said.

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