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Pangbourne Properties achieves 56% total return for year to June

Posted On Thursday, 01 September 2005 02:00 Published by eProp Commercial Property News
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The group announced a 5% increase in distribution to 96,0 cents (2004: 91,5 cents) which, together with a 43% increase in share price over the 12 month period, gives a total return of 56%.

Property-Housing-Residential- 5% increase in distribution to 96 cents

- occupancies rise to 96%

- total return to unitholders of 56%

- Ongoing transformation activities:

Board approve sale of 5% equity to BEE group Yard Capital subject to shareholder approval

Staff empowerment scheme to be extended

- 49% subsidiary iFour Properties concludes SA's first commercial mortgage-backed securitisation

- 43% subsidiary Siyathenga Properties listed on JSE

Pangbourne Properties continued its winning streak over the year to 30 June 2005, delivering a total return of 56% to unit-holders over the period.

The group announced a 5% increase in distribution to 96,0 cents (2004: 91,5 cents) which, together with a 43% increase in share price over the 12 month period, gives a total return of 56%.

Occupancies improved to 96% from 93,8% in 2004 from 90,7% the previous year. "This is a result of our ability to actively manage the short term leases associated with an industrial portfolio. This in turn translates to achieving our aim of securing a reliable and growing distribution for unit holders. Although this is a great reflection of the company’s performance over 1 year, given that property is a long term investment our track record of 20% annualised return to investors over a 10 year period is even more impressive." says CEO Atholl Campbell.

The industrial property market has lagged particularly the retail segments in recent years, but there is now evidence of improving demand for industrial space, with rentals hardening and valuations of properties improving by 15% to 18% over the last year - well ahead of inflation.

"There is a shortage of quality industrial space, and very little new stock coming onto the market," says Campbell.

The group specialises in industrial properties including acquisitions of under-performing property portfolios and turning these around by filling vacant space, and more recently devlopments to tenants requirements on company owned land. As part of the strategy to maintain a hard-working investment portfolio the company will sell buildings not meeting its investment criteria.  Pangbourne sold various underperforming properties in the financial year to June 2005, including Maynard Plaza . Pangbourne's portfolio is predominantly focused in Gauteng (78%) and Kwazulu-Natal (20%), with the balance situated in Western Cape, Free State, North West and Mpumalanga.

The Pangbourne philosophy of strategic investments in specialised funds such as iFour and latterly Siyathenga has also started to take shape. The synergies of developing common platforms for growth and sustainability in these associated companies has benefited investors and simultaneously they have contributed to the success of Pangbourne.  . CEO Atholl Campbell says Pangbourne's results were lifted by its investment in iFour, which last year issued South Africa's first commercial mortgage-backed securitisation, thereby diversifying its funding sources and lowering its cost of debt.

More recently, Pangbourne launched a second specialist property fund, Siyathenga, which was listed on the JSE board in August 2005. Pangbourne retains a 43% interest in Siyathenga, whose share price jumped to 575 cents from 500 cents after listing. Siyathenga was created as a vehicle for high grade retail properties in response to demands for investors for more direct exposure to the booming consumer retail market. Following the Siyathenga listing, Pangbourne's gearing fell to 31%, well within its allowable limit. This provides sufficient capacity for further property acquisitions.

Pangbourne was the country's first property loan stock company having listed in 1987 and still remains today one of the few that focuses on managing its own properties,  giving it greater control over expenses.

Pangbourne's market capitalisation has grown from R250 million in 1998 to the current level of R2,17 billion. The value of property assets have from R325 million in 1996 to about R2 billion in 2005, boosted by last year's acquisition of a portfolio of properties from Strupot Property Investments for R439 million. Although many of these properties have now moved across to Siyathenga as specialist retail properties they have from Pangbourne investors perspective been replaced by an investment in Siyathenga which not only listed at a premium to net asset value but also was oversubscribed in terms of its public offering.

Pangbourne has also announced that it is in advanced stages of discussions with private equity fund Yard Capital which could see the BEE group acquire 5% of its units in issue. Campbell says this transaction, if successful, will provide Pangbourne with broader property acquisition opportunities. It is not expected to have any dilutionary impact on distributions in the short to medium term. The transaction has been approved in principle by Pangbourne's board, subject to all conditions precedent being met. Further details of the transaction will be announced in due course.

Pangbourne management currently hold approximately 7% of the group's units in issue, but the intention of the is to extend share ownership to all staff. Details of this scheme will be announced in due course.

Looking forward, Campbell says prospects for the industrial property market are robust, with rentals expected to appreciate at rates above inflation, particularly after several years of lagging retail and commercial properties. Interest rates are likely to remain low for the foreseeable future, which augurs well for the property sector.



Last modified on Monday, 05 May 2014 16:29

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