Listed property company Orion Real Estate, which has been undergoing restructuring this year, on Friday reported a reduced headline loss a linked unit of 2,31c for the year to June.

This was a significant improvement on the headline loss of 13,88c reported last year.

Orion Real Estate, formerly Alpina Investments, said the financial year was a "year of rising commercial property prices" and that its portfolio had gained value over the year under review.

It said as far as headline earnings were concerned, it had several reasons to expect "improvement going forward" including reduced operating costs, rental escalations of more than the expected inflation rate, and the improvement in demand for office and retail space.

The company said lower interest rate charges "resulting from more efficient debt funding" and the injection of more profitable properties into the portfolio, would also have a positive effect on headline earnings.

It said expected property sales would also yield further capital and revenue gains. A number of property disposals had occurred after the financial year-end.

It said R11,4m had been received from Gauteng's public transport, road and works department as an expropriation payout on a property in Johannesburg as part of government's construction plans for Gautrain.

The company said the price paid would result in a gain of R1,86m but that management was contesting the settlement and was seeking compensation based on the directors' valuation of the property of R21,0m.

"Should these efforts prove successful, a further gain of R8,54m will be realised for the group," said management.

The company also said that the sale of a property called SS Manchester Park had resulted in a loss of R200,000.

The company, created this year through a reverse takeover of Alpina by the Gmeiner family's Orion Group, said in July that it planned to increase to its property portfolio from the then R400m to about R1bn within the following 18 months.

It also said at the time that it was looking to conclude an empowerment deal in the near future, which would see an empowerment partner obtaining 10% equity.

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