HIGHLIGHTS

- Delivery of sustainable returns to unitholders
- Total return to unitholders up 61% for the year
- Distribution increased by 5,1% to 82 cents
- iFour launches SA's first commercial mortgage-backed securitisation, which was 6,5 times over-subscribed
- Occupancies 94,8%
- Portfolio value increases to R1,98 billion from R1,7 billion in June 2004

Property loan stock group iFour delivered a total return of 61% to unitholders over the financial year ended 30 June 2005. This comprised a 48% appreciation in the linked unit price over the period plus a distribution of 82 cents.

Revenue, though not directly comparable with the previous year's figure due to a number of disposals and acquisitions, increased 38% to R306,4 million (2004: R221,6 million).

iFour CEO James Nunes says property expenses were well contained during the year to 24,9% of revenue compared to 26,3% for the previous year. Interest paid increased to R114,1 million from R80,9 million in financial 2004 due largely to debt raised over the previous two years for the acquisition of properties worth R1,2 billion.

iFour concluded the country's first commercial mortgage-backed securitisation in November 2004, earning it the Banker Award for "Deal of the Year" in South Africa. Nunes says the securitisation, which attracted strong interest from the investment community, has the advantage of diversifying the group's funding sources and will, in the longer term, reduce its cost of funding.

"The fact that the securitisation issue was 6,5 times over-subscribed tells us that there is a large and unsatisfied demand from investors for this kind of paper," says Nunes. "It is also a clear vote of confidence in the quality of the properties included in the securitisation."

An initial R800 million was raised under the R2 billion programme, which allows sufficient capacity for further issues to fund the group's future expansion plans. Capital raised from the securitisation issue was used to retire debt of R320 million and R480 million from Standard Bank and Absa respectively. Aggregate borrowings of R974 million represent a loan-to-value ratio of 49%, below the 55% maximum set by the company.

iFour increased the value of its property portfolio to R1,98 billion from R1,7 billion the previous year. This represents a nearly three-fold increase in portfolio value since listing in June 2002.

iFour comprises 106 properties with a gross lettable area of 506,577 square metres. The portfolio is more or less equally split between industrial, office and retail use. Two-thirds of the portfolio is located in Gauteng, with the balance spread between Kwazulu-Natal, Western Cape, Free State, Limpopo and Mpumalanga.

Acquisitions and capital expenditure during the year amounted to R152,8 million, the largest of which was the 10,284 square metre Venda Plaza. The iFour portfolio now includes six centres, valued at R253 million, located in township or rural areas. Since year end the Ziyabuya Shopping Centre in Port Elizabeth was acquired. This is the dominant retail centre on the main road between Port Elizabeth and Uitenhage. 

Nunes says rural and township areas are currently under-serviced in terms of retail centres, and iFour intends to expand its coverage of these areas in the years ahead with centres that dominate their catchment areas and have at least 70% national tenants. The company increased its weighting in the retail sector to 32% from 25% a year ago to capitalise on the growth in consumer confidence fuelled by rise in disposable incomes. "This has led to a demand by retailers for further space in key locations which is exerting upward pressure on rentals," says Nunes.

The portfolio is well balanced, with approximately one third weighting in each of the retail, office and industrial sectors.  “We are still looking to grow our industrial and retail portfolios due to the demand and the growth in the economy.”

Looking forward, Nunes says iFour is confident of delivering sustainable growth on distribution to unitholders, on the back of the buoyant economic conditions.

About iFour

iFour is a property investment company, which listed on the JSE on 10 June 2002. Its diversified portfolio of commercial, retail and office properties, is currently valued at R1,9 billion.

The company’s assets are spread over four provinces - Gauteng, the Western Cape, KwaZulu Natal and the Free State.  Pangbourne owns a 48% stake in iFour, and also conducts the company’s property management.

iFour’s vision is to become a R2 billion market cap company, offering shareholder spread, liquidity and security of earnings.  The vision includes portfolio growth and diversification through the acquisition of prime property, over the next five years.

iFour combines innovation, quality and service integrity to provide investors with the opportunity to participate in a well structured, professionally managed, property investment portfolio that yields sustainable returns.