Metboard Properties increased its distributions 7% to 19,80c for the six months to September on the back of a better performing property portfolio, reduced vacancies and savings on the cost of debt.

The industrial, property-focused loan stock appears to have turned the corner after two years of sluggish growth, with distribution increases of 2,6% and 3% in the 2004 and 2005 year ends respectively.

Metboard executive director Estienne de Klerk said yesterday the slow growth was due to a struggling industrial property market.

He said that, over the last three years, Metboard had sold about R300m worth of its smaller and poorer-quality properties and made better-quality acquisitions worth between R500m and R600m.

De Klerk said Metboard had also reduced its vacancies from 5% a year ago to 2,1%. He said the company had managed to make savings on the cost of debt in the current lower interest rate environment.

De Klerk said where Metboard renewed leases with tenants, rentals had increased 16,2% on average in the six-month period.

Andisa Securities property analyst Len van Niekerk said it looked "like growth came from acquisitions and lower interest rate expenses".

Catalyst Securities MD Andre Stadler said an improved industrial property market had limited the effect of "downward reversions on long-term leases" for Metboard.

"The key risk (Metboard) management identified going into this financial year was potential for downward reversion on long-term leases, with 23% of their portfolio's lettable area coming up for renewal this financial year," said Stadler. But he said the improvement in industrial property market fundamentals had limited this downside risk.

Business Day
 
Publisher: I-Net Bridge
Source: I-Net Bridge