Freestone Property Holdings acting CEO Michael Aitken said yesterday the company had boosted its portfolio to R1,1bn by buying property worth R287m from Momentum last year.
This helped cut borrowings from 81% to 58% of the property portfolio’s new value with the issue of new units to Momentum.
The borrowing levels are now more in line with the rest of the listed property loan stock sector, where borrowings usually range up to the mid-50s as a percentage of their property portfolios. It also almost tripled Freestone’s market capitalisation to R607m.
"Our intention is to further reduce gearing levels to about 50% in the medium term. We will do that by issuing Freestone units in combination with debt for further acquisitions," said Aitken.
Listed property analysts previously credited new fund manager Corovest for stabilising the fund. Corovest was appointed in June 2003 at the request of unitholders. Aitken is MD of Corovest.
Freestone is now jointly managed by Corovest and RMB Properties through a separate shared management company.
Freestone also reported a net profit for distribution of R17,5m for the six months to December or a distribution of 23,5c a combined unit.
As A-Prop, the company had experienced a substantial loss in the value of its linked units since listing, as well as a decline in net asset value.
Early last year a report-back by a committee appointed by A-Prop’s board concluded that, among other factors, the drop in value could be attributed to an ineffectual due diligence process.
This resulted in the overvaluation of acquisitions, among other things. Freestone said it was still taking legal action against certain vendors and the promoters of A-Prop.
"The company’s attorneys have reported further possible claims against certain vendors and the promoters relating to the loss in value of Arnold Property Fund," said Freestone.
The company said the promoters had agreed to make available certain documents relating to the initial procurement of the property portfolio.
"The board anticipates further legal actions will be instituted in the near future," it said.
