Wapnick's CBD bet pays off

Posted On Wednesday, 09 May 2007 02:00 Published by eProp Commercial Property News
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Octodec and Premium have over the past few years consistently managed to outperform other listed property loan stocks (PLSs) and property unit trusts (PUTs)

Jeffrey WapnickGood times continue to roll for shareholders of the Pretoria-based Wapnick family's stable of property funds: Octodec Investments and Premium Properties. Both Octodec and Premium have over the past few years consistently managed to outperform other listed property loan stocks (PLSs) and property unit trusts (PUTs), both in terms of income payouts and share price growth.

Investec listed property investments research shows that since 2004 Octodec and Premium have delivered average annual distribution growth of more than 20% - the only two listed property funds to do so. That compares to a sector average of 10,4% over the same timeframe.

In terms of share price growth, figures from Catalyst Fund Managers place the Wapnick-managed funds as the sector's two top performers over the past three years to end-March 2007. Assuming distributions were reinvested, Premium shareholders would have seen returns of 305% over the past three years, while Octodec delivered slightly less at 269%.

The next best performing listed property funds over three years were Hyprop Investments (265%) and ApexHi (256%), both managed by Marc Wainer, and Wolf Cesman's Madison Property Fund Managers.

Last month Octodec and Premium again announced way above average income growth. Octodec's interim payout to end-February was up 27,1%, while Premium's full-year distribution increased 18,9%.

The Wapnicks' track record is impressive, considering that a large chunk of both portfolios is situated in the inner cities of Pretoria and Johannesburg, areas that most property investors steered clear of in recent years. They've been particularly successful in redeveloping old commercial buildings into residential rental stock in the Pretoria CBD and, more recently, in downtown Jo'burg.

Jeffrey Wapnick, MD of both Octodec and Premium, says that the Pretoria and Johannesburg CBDs still offer plenty of growth potential, particularly in terms of retail and residential redevelopment. In the six months to end-February, Octodec bought eight CBD buildings for a total R167m. Most are located in Jo'burg's CBD and include Elephant House, Inner Court and Anderson Place.

Though some of those buildings may be converted into residential apartments, Wapnick also plans to increase Octodec's exposure to the industrial sector. Conversion of former office block Registry House in downtown Jo'burg into multi-use warehouse facilities at a cost of R9m has already started.

Premium also continues to add CBD properties to its portfolio. North City in Braamfontein was recently bought for R21,9m, while the residential conversion of Brisk Place is on schedule for occupation by July this year. In Pretoria, the company acquired seven CBD properties for a total of R104m, including Die Meent, Poyntons, AVN and Praetor.

Wapnick says apart from unlocking value through refurbishment and redevelopment, both funds have also benefited from "extremely favourable" trading conditions that have seen strong rental growth on lease renewals. Rental income in the Premium portfolio increased 28,6% in the year to end-February, while Octodec's rental income was up 24,5% in the interim period. Octodec's retail properties, such as Killarney Mall (Johannesburg) and Gezina Stad (Pretoria), also recorded strong rental growth.

Though it's difficult to find anything negative to say about these funds there is a drawback: it isn't always easy to get your hands on Premium and Octodec stock, which remains quite tightly held by the Wapnick family.

Last modified on Thursday, 24 April 2014 16:21

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