Pivotal Property Fund today announced that it has achieved net asset value per share growth of 45%, to R14.69, for its full year to 28 February 2014.
A property investment development fund with a longstanding track record, Pivotal is a public unlisted company with an over-the-counter trading platform through PSG Konsult. Pivotal was established in 2005 by property developer Abland and its partners as a property holding vehicle to invest in developments and rental producing properties.
The total Pivotal portfolio, including the unvested portfolio, has grown its R4.9 billion portfolio of low-risk A-grade properties to create wealth for shareholders with optimised net rental and capital growth. Its portfolio comprises 33 properties. By size, 66% of its portfolio is office property and 34% retail property. Pivotal currently distributes 25% of its distributable income annually, based on a share option scheme. The balance is reinvested in value enhancing property upgrades, acquisitions and new developments.
Pivotal’s positive results continue its consistent track record of growth and performance for its investors. Over the last five years, since 2009, Pivotal has delivered compounded annual net asset value growth of 24%.
“We aim to deliver above average market growth rates,” says Jackie van Niekerk, Managing Director of Pivotal Property Fund.
Van Niekerk also announced that Pivotal has begun engaging with its advisers about a possible listing on the JSE main board as a development fund.
“The benefits of listing in the present market, with our strong development pipeline with Abland as a leading developer of top-quality property developments, appear appealing at this early stage. This could result in accelerating Pivotal’s listing which will assist in unlocking large scale future development pipeline.”
The culmination of two major developments, and a pair of strategic acquisitions, contributed significantly to Pivotal’s positive portfolio returns during the year.
Alice Lane, Phase 1, the fund’s flagship investment in Sandton, was completed in September 2013 with a total gross rentable area of 18,790sqm. Well located in the heart of the Sandton central financial district, the development is a Green Building Council South Africa (GBCSA) 4-Star Green Star SA rated building. It includes multi-tenanted office space and five parking basements. Pivotal owns a 30% undivided share of the R538 million property, of which 20% is directly held and 10% is in an unvested trust. The building was developed at a yield of 9.2% and Pivotal’s undivided share is currently valued at R161 million at a yield of 7.7%.
Bowman Gilfillan’s offices in Bree Street, Cape Town were completed with a gross rentable area of 8,600sqm. Pivotal has a 37.5% undivided share of the property. The building was developed at a yield of 8.2% and Pivotal’s share is currently valued at R90 million at a yield of 7.62%
Pivotal also acquired undivided shares in two prime retail shopping centres: 40% in the 76,000sqm super-regional Cradlestone Mall in Ruimsig, which has a market value of R1.5 billion and was acquired at a yield of 8.3%, and Pivotal’s share is currently valued at R600 million at a yield of 7.4%; and a 17% stake in the 30,006sqm Goldfields Mall in Welkom, which has a market value of R595 million and was acquired at an initial yield of 9.5%, and Pivotal’s share is currently valued at R100 million at a yield of 7.8%.
Confirming the quality of its growing portfolio, two of Pivotal’s new property assets recently won top honours at the SAPOA Innovated Excellence Awards. Alice Lane, Phase 1, won for commercial property development and Cradlestone Mall won for retail development.
Supporting its growth, Pivotal also focuses on maintaining the value of its properties through constant maintenance and upgrades, optimal tenant mix, and low vacancy levels. At year end its vacancy levels were healthy at a low 2% of office space, 3.5% of retail space in properties under 20,000sqm and 3% in its larger retail properties.
The company successfully completed a R305 million oversubscribed capital raise during the year which facilitated the acquisition of Cradlestone Mall. It also strengthened its management team, including appointing Financial Director Aaron Suckerman.
Pivotal’s borrowings of R1,5 billion represent gearing of 52%. The portfolio is 97% hedged against changes in interest rates. Its weighted average cost of debt is 10.21%.
Its immediate board-approved pipeline includes an approved 40% investment in Kyalami on Main Mall. Set to provide convenience shopping, its construction will commence in October 2014. The expansion of phase 2 at Wonderboom Junction is also approved and will extend the mall from 38,000sqm to an estimated 65,000sqm. In addition, Alice Lane Phases 2 and 3 are currently under construction. Phase 2 will have a total gross rentable area (GRA) of 16,000sqm and is due to be completed in November 2014. The fund is negotiating the acquisition of land holdings with approved bulk of 99,800sqm.
“Despite the challenging economic environment in which we operate, we are confident that we’ll continue to deliver sustainable performance and value for investors,” says van Niekerk. “Our excellent development pipeline of A-grade properties places us in a unique and confident market position.”