IAPF proposes internal management & third-party funds management platform

Graeme Katz IAPF
IAP CEO, Graeme Katz.

Investec Australia Property Fund has released its financial results for the six-month period ending on the 30th of September 2020, reporting an interim distribution of 4.39 cpu, pre withholding tax, which equates to 100% of ‘Adjusted Funds from Operations’ (AFFO) for the period.

The initiatives undertaken by the fund in late 2019 and early 2020, which were designed to strengthen the fund’s balance sheet, have enabled the fund to navigate an extremely challenging period and deliver a solid financial result. With gearing of 22.4%, a weighted average debt expiry of 7 years, no debt maturing until FY23 and $70 million of undrawn debt at our disposal, we believe the fund is well positioned to deal with the continuing uncertainty presented by COVID-19 and to take advantages of opportunities when they arise” commented Investec Australia Property Fund CEO, Graeme Katz.

Katz says the fund’s property portfolio has performed well over the past six months off the back of strong leasing activity which saw 38 002sqm of space leased or subject to signed heads of agreement.

This has resulted in the fund’s weighted average lease expiry increasing from 4.5 years at 31 March 2020 to 4.8 years, and 45.7% of leases now expiring after 5 years.3 Commenting on the Fund’s portfolio”.

The asset management team continue to deliver strong leasing outcomes by focusing on hands on active management of both our properties and our tenants. In addition, we have collected 99% of rent over the period despite the challenges of Covid-19, preserving the long-term sustainability of the fund’s income. The fund’s portfolio of metropolitan office and industrial properties has proven to be relatively resilient given the continuing market uncertainties. The significant majority of the Fund’s tenants are government, listed or multinationals, with limited exposure to tenants in the retail and consumer discretionary sectors”.

Investec Australia Property Fund’s portfolio comprises of thirty properties valued at $1.1 billion. Similar to the fund’s reported full year results in May, a rigorous process was undertaken to determine the fair value of the fund’s properties which involved both external valuations and directors’ valuations, utilizing individual risk assessments and taking into account the known anticipated impacts of Covid-19.

This has resulted in an underlying net asset value of $1.34 per unit, up from $1.32 per unit on the 31st of March 2020. The fund also announced that it had entered into an agreement with the Investec Group to internalise the management of IAP and to acquire a funds management platform.

The internalisation proposal is expected to deliver unitholders a number of benefits, including an enhanced corporate governance framework, alignment of interest, continuity of management and the potential for increased investor participation. It also provides IAP with the opportunity to build out a funds management platform which will provide diversification of income streams. The proposal has the unanimous support of the independent directors and an independent expert has concluded that it is fair and reasonable and in the best interests of unitholders. We believe this is an exciting opportunity for IAP to set itself up for the next phase of its growth and look forward to the unitholder meeting on 17 November” concludes Katz.