Listed property loan stock company Spearhead Property Holdings, which owns properties worth R1,5bn, said yesterday its distribution growth for the year to June had increased 13% to 226c a linked unit on the back of renegotiating leases at higher rentals and an improvement in the recovery of costs from tenants.

"Tenants are more keen to renew their leases sooner than later because of the expectations of massive jumps in rentals," said CEO Mike Flax.

Spearhead, which has a policy of paying rates, water and lights on behalf of tenants and then recovering the costs, said its recovery rates had grown from about 80% to about 95%.

Office and industrial properties now comprise about 70% of Spearhead's portfolio. The company said its profits had been significantly boosted by its trading and development activities.

Flax said nearly R1bn was committed in these areas over the next 30 months.

"We have become one of Cape Town's most proactive developers and this is generating a steady source of additional income," he said.

Flax said that projects such as The Oasis luxury retirement village would continue to provide income for about five years.

The company's vacancy level was 6%, an increase from last year's 4,5%. But Flax said this was mainly due to Spearhead acquiring a number of vacant properties for redevelopment.

Flax said Spearhead unitholders would also be voting on the Redefine Income Fund takeover bid at the end of September.

He said Spearhead had canvassed its main unitholders and they were "overwhelmingly in favour of the deal with quite a large proportion already providing Redefine with irrevocable undertakings to support the deal".

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