Octodec Properties Limited interim distributions increase by 27,1%

Posted On Wednesday, 25 April 2007 02:00 Published by eProp Commercial Property News
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JSE-listed property loan stock Octodec Investments Limited has once again produced excellent growth in distributions to linked unitholders for its six-month interim period to 28 February 2007

Jeffrey WapnickJSE-listed property loan stock Octodec Investments Limited has once again produced excellent growth in distributions to linked unitholders for its six-month interim period to 28 February 2007. Octodec’s distribution of 54 cents per linked unit increased by a substantial 27,1% on that paid in the previous comparable period.

Jeffrey Wapnick, Managing Director of Octodec, attributes this strong performance to the redevelopment of properties, favourable renewals of leases, strict expense control as well as extremely favourable trading conditions, which have all contributed to the growth in distributable earnings.
 
“With property fundamentals remaining strong, management is optimistic that the company will continue to grow earnings on par with, if not better than, the market average, due to its continued focus on unlocking the value of the portfolio as well as the expected continuation of a favourable economic environment,” says Wapnick.

Octodec’s net asset value increased by 18,3% from the previous comparable period to 1330 cents and its total investments exceeded R1,9 billion. Rental income and net rental income increased by a considerable 24,5% and 34,6% respectively.

Octodec’s gearing at the end of the period under review was a conservative 32% as against 34% at 31 August 2006. During the period the borrowings increased by R62 million, as a result of acquisitions of investment properties and development costs. The company has available facilities to fund future cash flow requirements.

Interest rates in respect of 71% of borrowings have been fixed at an average weighted interest rate of 10,5% maturing at various dates ranging from November 2007 to November 2010.

The value of Octodec’s property portfolio increased by R187 million, growing net asset value by 18% after accounting for deferred tax. At financial year end at least one-third of the company’s property portfolio is valued on a rotational basis by an external valuer.

During the period under review three properties were purchased for an aggregate of R34 million and transferred to the company. These purchases include Elephant House situated in the Johannesburg CBD and two light industrial properties situated in Johannesburg.


An additional eight properties have been purchased for an aggregate consideration of R133 million, but not yet transferred. These include Inner Court and Anderson Place in the Johannesburg CBD, as well as Rentmeester in Pretoria.

The company’s retail property portfolio, which comprises five quality shopping centres, continued to enjoy strong growth in earnings due to favourable renewals and contractual rental escalations. The redevelopment of Killarney Mall which was successfully completed in October 2005 at a cost of R97 million as well as the refurbishment of Gezina Stad resulted in much improved rentals and these shopping centres are now well tenanted.

The Sildale Industrial Park development was completed during the period at a cost of R20 million. Due to the strong demand for these light industrial units the development of additional units totalling 5,000m² is planned.

Octodec continues to unlock the value of its Johannesburg and Pretoria CBD portfolios by the redevelopment and refurbishment thereof. Construction has commenced at Registry House in the Johannesburg CBD to convert this office block to multi-use warehouse facilities at a cost of R9 million.

IPD (Investment Property Databank) reports that for the second consecutive year in 2006, the industrial sector led the pack with a return of 31.1%. “Octodec is strongly positioned to benefit from the strong performance of industrial property by increasing its exposure to this sector,” notes Wapnick.

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