Distribution growth, lower than the listed property sector’s double-digit growth this year, was hindered by vacancies in the company’s portfolio. The vacancies have since been filled. Atlas said its tangible net asset value a unit rose 20% over the period. Vacancies decreased from 7,8% to 2,9% of total building area and from 4,6% to 1,9% of rental income.
Andre Stadler, MD of Catalyst Fund Managers, said the results were “marginally better than what we anticipated”. “They (Atlas) have been able to reduce their vacancies quite significantly, which has contributed to an improved second six months,” said Stadler. He said Atlas’ distribution growth had been relatively low in the first six months of the year, at 7,07%, compared with the same period last year.
However, in the second six months, the distribution growth was up 10,8%, compared with that of the corresponding period last year. Stadler said the average distribution growth on companies coming out with results from June 30 on a market capitalisation basis had been 13,8%. Atlas’ lower growth was due to its vacancies, “which they have subsequently turned around”. Stadler said Atlas had relatively low debt levels, and did not “get the same benefit of leverage that other companies have”.
Atlas CEO Ian Raubenheimer said the company’s borrowings were low at less than 25% of total assets. Many listed property companies have debt levels of 30%-45% of total assets. “Sustainable earnings growth is our number one priority,” said Raubenheimer. He said Atlas did not want to “shoot the lights out one year” and then have flat earnings the next year. “We are quite comfortable with the results.”
Atlas said the commercial property market had performed strongly across all sectors, with industrial and office rentals, in particular, showing solid growth. “The strong economy led to a decline in vacancies and strong demand and high building costs are exerting upward pressure on rentals,” said the company. Raubenheimer said property market fundamentals was “solid, with upward pressure on rentals on the back of strong fixed investment and consumption expenditure”.
