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ApexHi increases distributions by 19,7%

Posted On Thursday, 08 February 2007 02:00 Published by eProp Commercial Property News
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ApexHi Properties Limited has distributed 73 cents per combined unit (A unit: 32,85 cents; B unit: 40,15 cents) for the second quarter, bringing the total combined distribution for the six months to end December 2006 to 140 cents, a 19,7% increase on the corresponding period to end December 2005.

Gerald LeissnerFor the six months to December 2006, the A units received 63 cents per unit (2005: 52.65 cents), while the B units received 77 cents per unit (2005: 64,35 cents). The newly listed C units will only participate in income distributions when the combined quarterly distribution exceeds 75 cents.

ApexHi delivered a combined total return of 54% for the six month period, compared with the property loan stock index total return of 26%. The A unit generated a 41% return, while the B unit yielded a 61% return. The C unit’s return amounted to 120% since its listing on 9 October 2006.

ApexHi CEO, Gerald Leissner says the results for the six months include R15,2-million received in respect of a profit sharing arrangement with Matemeku, following the repayment on an R84,5-million loan to Matemeku to acquire a 40,6% interest in Calulo Property Fund. Matemeku sold its shares in Calulo at a profit, and repaid the loan in October 2006. ApexHi’s share of the profit amounted to R15,2-million, which equates to 6 cents per combined unit.

“The second quarter’s distributable earnings, before the R15,2-million one off, were equal to the first quarter’s distribution, due to the receipt of a lease cancellation fee in the first quarter, repair and maintenance expenditure in the second quarter budgeted in the first quarter and the increased asset management fee as a result of the  strengthening of the combined unit price during the second quarter,” he says.

During the period in review, the C unit was successfully issued to existing unit holders, at no cost, on the basis of 55 C units per 100 B units held and 45 C units per 100 A units held. In terms of a scheme of arrangement, 30% of the C units were sold to BEE consortiums at R2,00 per unit. At end December 2006, the C unit was priced at R4,40, yielding a BEE value of R330-million. “This transaction has resulted in ApexHi achieving 10% BEE at equity level, a change of distribution policy for A and B units, and an increase in unit holder value,” says Leissner.

The properties were revalued by the directors at 31 December 2006 to R7,6-billion, resulting in a fair value adjustment of R780-million, representing an 11,5% increase over the prior valuation. The revalued portfolio reflects an average yield of approximately 11,7%. The portfolio comprises a total of 436 properties, with a lettable area of 2,6-million square meters, with a vacancy of 8,4%.

During the six month period, 10 properties were acquired for R148,5-million at an average yield before gearing of 11,6%. 

In line with ApexHi’s strategy to dispose of properties which no longer meet its investment criteria, 18 properties were sold for R113,4-million, at an average forward yield of 5%. A surplus of R4,1-million was recorded on the book value, and the proceeds were used to reduce floating debt.

R138-million was spent on refurbishing and upgrading the property portfolio at yield enhancing returns.

Leases covering 306 147m2 expired during the period, while leases were concluded over 321 557m2, 75% of which comprised renewals. This reduced the vacant area from 9% to 8%. In addition, the average rental growth on lease renewals was 12%, with office and industrial rentals achieving growth of 18% and 24% respectively.

ApexHi’s debt is currently R1,67-billion, of which R1,365-billion (82%) is fixed at an average all inclusive rate of 10,27% per annum for an average period of six years.  The R1,67-billion on the revalued portfolio of R7,6-billion represents a 22% gearing level.

Since 1 January 2007, ApexHi has acquired a further eight properties for R536-million at an initial yield before gearing of 11,7%, and disposed of 33 properties for R287-million at a forward selling yield of 9%. Subsequent to these transactions, the property portfolio now has 412 properties, valued at R7,9-billion, with a vacancy of only 7,1%.

Property fundamentals remain strong and notwithstanding the R15,2-million profit share on the Matemeku transaction, distributions for the second half of the 2007 financial year are expected to exceed those of the first six months. ApexHi still anticipates superior growth in distributions for the full year ending 30 June 2007, however, the rate of distribution growth for the full year is not expected to be as high as the interim period.

Last modified on Saturday, 26 April 2014 13:17

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