– Distributable earnings of R238.6 million achieved for the financial year ending 31 August 2016.
– Translates into 8.8% increase in the full year B-share distribution; within the guidance range of 8-10% when compared to prior financial year ending 30 June 2015.
– Increase of 5.9% in the full year A-share distribution.
– Quality of portfolio maintained – 28 assets valued at R150.3 million per asset on average.
– Vacancies decreased to 4.6% from 5.8% in the prior financial year.
– Weighted average rental escalations remains robust at 8.5% despite challenging business environment.
– Final dividend of 22.36413 cents per A-share declared (interim dividend of 21.99750 cents per A share).
– Final dividend of 14.77447 cents per B-share declared (interim dividend of 12.22909 cents per B share).
– Ascension and Rebosis have entered an agreement for Rebosis to acquire all of the Ascension A-shares it does not already own.
Ascension has recently posted solid earnings growth for the financial year ended 31 August 2016.
Distributable earnings growth of R238.6 million was achieved, translating into an 8.8% increase in the full year B-share distribution and a 5.9% increase in the full year A-share distribution. The growth performance of the B-share is in the mid range of management’s guidance of 8-10%.
“Our performance is underpinned by Ascension’s high-quality assets and the defensive nature of our tenant profile. The 28 assets in the portfolio is valued at an average of R150 million each, and are located in nodes strategic to government tenants,” commented Kameel Keshav, Chief Executive.
“During the period we focused extensively on reducing the vacancy rate, which came down from 5.8% in the prior year to 4.6% currently. Actual vacancies were at 22% when we took over ownership of the management company in 2015 which is greatly encouraging”.
“There is historically low churn in government tenants, provided that the assets are maintained. 60.3% of the lettable space in the portfolio is tenanted by Government, in line with our strategy to leverage our empowered status”.
“We continue to engage with the DPW’s Property Management Trading Entity on their new leasing framework going forward. We remain positive on achieving longer term rentals and weighted escalations as a result of our empowerment credentials,” Keshav added.
Ascension’s portfolio totals 315 015 m2 of gross lettable area (GLA), of which 82.4% comprises commercial offices, 9.9% retail and 7.7% industrial. The Company’s retail exposure is as a result of the high street retail of its commercial office buildings and it does not own any retail specific assets.
75.4% of R1.592 billion Ascension’s debt is currently hedged with the weighted average cost of debt is 9.39%. Management are currently reviewing some hedging options to replace the expiring hedge for another 4 year term. The Group’s loan to value is below the industry benchmark of below 40% at 37.8%, providing some headroom for growth.
Ascension also announced that it has concluded an agreement with Rebosis Property Fund Limited, a majority shareholder of Ascension’s A-shares terms of which Rebosis has given notice of its firm intention to offer to acquire all of the Ascension A ordinary shares that it does not already own in exchange for Rebosis A ordinary shares. The acquisition offer will be by way of a scheme of arrangement on a swap ratio of 19.34236 Rebosis A ordinary consideration shares for every 100 Ascension A shares held.
The terms of the Rebosis A ordinary shares effectively mirror the terms of the Ascension A ordinary shares. In addition, the cash-cover ratio applicable to the Rebosis A ordinary shares will be significantly higher than the cash-cover ratio applicable to Ascension A shares.
Despite the challenging business environment, management remains confident that Ascension’s quality assets, defensive tenant profile, coupled with encouraging changes in the way government recognizes and supports empowerment in the sector, should ensure that the group continues to deliver acceptable returns to its shareholders.