Irongate Group (IAP) has released its first set of financial results since acquiring the management rights from the Investec Group and becoming an internally managed REIT.
The financial results for the year ended 31st of March 2021 reported a final distribution of 8.92 cps for the 2021 financial year which equates to 96.3% of ‘Funds from Operation’ (FFO). IAP CEO Graeme Katz says this is in line with the forecast provided in the explanatory memorandum issued as part of the internalisation transaction, demonstrating the company’s resilience despite the challenging past twelve months.
The fund’s balance sheet remains strong with gearing of 27.8%, below the bottom end of the fund’s target range, a weighted average debt expiry of more than six years, no debt maturing until FY24 and A$93.5 million of undrawn debt available. Funding costs have reduced from 3.05% as at the 31st of March 2020 to 2.84% as at the 31st of March 2021.
IAP’s property portfolio largely comprises of metropolitan office and industrial properties, two of the better performing sectors over the past year. Since the 31st of March 2020, over 64 000m2 of space has been leased or is subject to signed heads of agreement and the weighted average lease expiry has increased to 4.7 years.
“The past year has seen significant disruption to usual workplace practices, with traditional occupancy models being challenged. Despite this, our asset management team has delivered strong leasing outcomes which has seen the portfolio occupancy remain high at 97.5%” comments Katz.
“In addition, we have collected 99.6% of rent for the period, which demonstrates the quality of our underlying tenant base. It is also pleasing to see that utilisation of our properties has been steadily increasing over the first few months of 2021 as Covid-19 restrictions continue to ease.”
The portfolio now comprises of thirty-two properties valued at A$1.237 billion. The increase in portfolio value over the past year has been driven by the off-market acquisition of four industrial properties in Brisbane for A$60.6 million and material uplift in the underlying value of many of the fund’s properties, in particular the industrial portfolio. This has contributed to an increase in net tangible assets from A$1.32 per security as at 31 March 2020 to A$1.43 per security as at 31 March 2021.
The past financial year was transformational for the fund, having completed the acquisition of management rights from Investec Group and rebranding as Irongate Group.
“Following the internalisation transaction, IAP is well positioned to take advantage of the exciting opportunities being originated by the management team. This includes building out our third-party funds management platform which, over time, will provide a meaningful source of income and profits for investors in IAP” says Katz.
The fund is targeting distribution growth in FY22 of between 2% and 3%. IAP’s policy is to payout between 80% and 100% of FFO, with an expectation for FY22 to be in the middle of the target range.