Solid returns lift property fund growth

Posted On Thursday, 03 March 2005 02:00 Published by eProp Commercial Property News
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Most of the 11 listed property funds and companies that reported interim and year-end results last month recorded solid distribution growth to their unitholders.

Property-Housing-ResidentialHowever, there was concern from one analyst who said that some of the funds and companies owning older properties on long leases might experience a downward revision of the lease escalations going forward.

Top marks went to listed property loan stock companies Spearhead Property Holdings and Hyprop Investments, which again reported stellar results.

Spearhead raised its interim distribution for the six months to December last year by 19% to 95c a linked unit, compared with the corresponding period the year before, while Hyprop Investments reported a 16,4% surge in its total distributions for the year ended December.

Hyprop’s distribution of 163c a unit beat its own forecast by 8%.

Spearhead’s results were attributed to increased rentals from the company’s property portfolio, increased trading and development profits, and lower financing costs, while Hyprop’s performance was said to be due to the performance of its retail portfolio, which includes its flagship shopping centre, Canal Walk in Cape Town.

Notable performances were also recorded by listed property loan stock companies Resilient Property Income Fund with a 7,2% rise in its distributions for the year to December, and Growthpoint Properties with a 6% surge in its distributions for the six months to December, compared with the previous corresponding period.

Property Loan stock company Apex Hi reported solid total distributions of 51c for its A units for the six months to December, the same amount distributed during the comparable period the previous year. Its total distributions for its B units increased 7% to 58,5c.

Martprop lagged the rest of the listed property sector distribution growth average of 5%, reporting a 2% increase in its distributions to 12,50c a unit for the six months to January this year.

Colin Young, fund manager of Old Mutual’s South African-listed property funds, said the debt of property companies and funds is a lot cheaper in the low interest rate environment, and that has come through in their distributions.

Young said property fundamentals were positive with the listed sector seeing rental increases. He said retail and industrial properties performed particularly well and vacancies had dropped.

But he said the market had seen a number of rental reversions on long-term leases that were signed in the middle to late 1990s in a high inflationary environment.

Annual 12% escalations agreed to at the time were now out of kilter with market rentals.

Angelique de Rauville, MD of listed property portfolio management company Provest, said the results were in line with expectations, with trading and development companies and retail-dominant property stocks reflecting a strong market.

Last modified on Tuesday, 13 May 2014 11:39

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