Sam Leon, CEO of the Investec Property Fund
Investec Property Fund today announced its results for the six months ended 30 September 2014.
Commenting on the results Sam Leon, CEO of the Investec Property Fund said: “The Fund continues to execute on its strategy of consistent growth over time by distributing net property income based on investment in good quality sustainable real estate. This together with conservative balance sheet management, a quality tenant base and long lease expiry profile positions us well going forward.”
During the period the Fund completed seven acquisitions to the value of R725 million and has announced the acquisition of a further R943 million of contracted acquisitions. The combined acquisitions of R1.7 billion are underpinned by high quality tenancies, a weighted average lease expiry (WALE) of 5.4 years and add a further 13 prime located office, retail and industrial properties to the portfolio.
Of the total acquisitions a high quality portfolio valued at R871 million was acquired from Investec Property. The majority of the purchase price will be discharged through the issue of shares to Investec for R535 million with the balance to be settled in cash. The cash portion will be funded mostly from the recently oversubscribed accelerated bookbuild in the amount of R291 million and from existing debt facilities. The significant component of equity issued allows the Fund to retain significant headroom for further acquisition. “This again underscores the value of the Investec connection to the Fund and the gratifying support of our major investors,” said Leon.
The total of the completed and contracted acquisitions together with the Fund’s exercise of its rights in the Investec Australia Property Fund Rights Issue in October 2014 will increase the total asset value of the Fund to R8.1 billion.
The acquisitions bring the Fund to a significant size having grown 4,8 times since listing only three and a half years ago. “This is particularly pleasing in that the growth has been underpinned by good sustainable real estate and the Fund is now getting to the scale necessary to effectively compete and also mitigate risk,” concluded Leon.
The client base remains a key strength of the Fund, with an estimated 87% of the tenancy comprising JSE-listed companies, large corporate and significant professional firms. Despite a marginal uptick in vacancy rate, vacancy levels across the portfolio remain very low at 3%. These factors make the Fund both robust and defensive going forward.
The Board expects underlying property performance in the second half of the year to be in line with that of the first half and maintains its guidance of historical growth levels in dividend distributions for the full year.
- Interim distribution growth of 8.3% to 54.65 cents per share (cps)
- Acquisitions of R1.7 billion concluded and announced
- Brings total portfolio value to R8,1 billion
- Equates to 84% asset growth in 12 months
- Conservatively geared at 22% with 86% hedged at half year
- Defensive weighted average lease expiry of 4.3 years
- Low vacancy at 3%