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ApexHi rides the interest rate wave

Posted On Wednesday, 29 June 2005 02:00 Published by eProp Commercial Property News
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Renegotiated terms benefit unit holders

Gerald LeissnerFollowing the recent surprise interest rate drops, ApexHi has renegotiated the terms of its fixed interest rates on its long term debt, resulting in a saving of R1,7-million per annum, equating to 1 cent per combined A and B unit.

ApexHi financial director, Colette van Wyk, says it is the company’s policy to manage and reduce risk wherever possible. “We aim to fix as much of our debt, at the lowest possible rates, for as long as possible, to protect the investor and limit our gearing risk,” she says.

ApexHi consults with Treasury Resources, which constantly monitors shifting movements in the yield curve. “They advise us of strategic opportunities to conclude and re-fix our borrowings so that we can maximise and take advantage of any movement in the interest rate cycle. We don’t pay the unwinding costs of the break, it is built into the new rate and spread over the new period of the fix,” says van Wyk.

The all-inclusive rate has reduced from 12,50% per annum at 30 June 2004 to 10,99% per annum in May 2005, which is partly a function of the repo rate drop, and partly a result of the company’s reduced risk margin. Prior to the new rates, the average maturity date was four years. This has now been extended to 7,2 years, with some rates fixed to 2015.

Total gearing amounts to R1,2-billion, of which 83% - or R965,2-million - has been fixed. The floating debt of R234,8-million currently bears interest at 9,5% per annum. The gearing is currently at 28% of the portfolio value. “To capitalise on the current favourable interest rate environment, our objective is to gear to 30%, although in terms of our Articles of Association, we are permitted to gear up to 35%.

Since listing in the PLS sector in 2001, the average all-inclusive rate has reduced, from as high as 13,15% down to the current 10,99%. Van Wyk says the new rates benefit investors, as the savings translate into increased distributions.

 

Last modified on Wednesday, 07 May 2014 08:35

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