- Gemgrow B forecast growth for September 2018 of 7-9%.
- Seven times cash cover on A share dividend.
- Acquisitions of R580 million concluded at an average yield of 11,85%.
- Strong balance sheet, LTV of 20,65%.
Gemgrow Properties today released solid maiden full year results. The Company declared a dividend of 26,09 cents per A share and 19,00 cents per B share for the quarter ended 30 September 2017. This brings the total dividend for the full year to 101,87 cents per A share and 73,51 cents per B share, which is well in line with the forecast stated in the circular posted to shareholders in September 2016.
“As a unique high yielding, high growth fund, we are pleased to announce meeting our forecast, as per the circular, during this reporting period”.
“We have successfully integrated the assets acquired from Vukile and Arrowhead”.
“Gemgrow remains focused on its core portfolio whilst actively pursuing yield enhancing acquisitions. We strive to be innovative and agile, adapting to ever changing conditions whilst actively managing our letting activities as well as streamlining efficiencies, providing accretion to our shareholders,” commented Alon Kirkel, COO of Gemgrow.
Gemgrow owns a portfolio of 129 retail, industrial and office properties valued at R4,5 billion, located across all provinces in South Africa. The total portfolio comprises 14% retail, 37% office and 49% industrial assets as measured by GLA. The average value per property as at 30 September 2017 was R34,6 million.
During the period under review Gemgrow acquired properties to the value of R580 million at a yield of 11,85%. The transfer of these properties will be effective in the new financial year.
“Gemgrow is uniquely positioned to consolidate high yielding assets in the market through yield accretive acquisitions on a fair value basis,” said Junaid Limalia, CFO of Gemgrow.
Vacancies marginally decreased from 7,73% to 7,71%; with retail at 5,77%, industrial at 6,18% and office at 10,51%.
Gemgrow has a strong balance sheet with a low LTV of 20,65%. The company refinanced R525 million of the R575 million that expired in September 2017 at a fixed rate of 9,39% over a five-year period. The remaining R50 million was recently refinanced for 5 years. For the properties acquired during the reporting period, R600 million in debt funding was secured at a fixed rate of 9,74%, over a period of five years. Our forward fixing of all the aforementioned transactions, has resulted in 94% of total debt being fixed from 15 November 2017.
“We actively manage the risks within our control. Our income is not materially exposed to a single tenant while our portfolio is diversified by sector, geography and grading. Our gearing and hedging of debt remains at prudent levels, providing good headroom for growth,” commented Junaid Limalia, CFO of Gemgrow.
Alon Kirkel, COO of Gemgrow concluded, “This year has seen its fair share of challenges, however despite this, Gemgrow has successfully concluded yield enhancing acquisitions, delivering on its mandate as a high growth high yield fund”.
“The dividend growth from our current portfolio, including concluded acquisitions, is expected to be between 7% and 9% on the B share, for the 2018 financial year.”