Investec Property Fund has published its results for the year ended March 2023.
The adverse volatile economic interest rate environment globally impacted the fund’s distributable earnings and dividend per share which declined by 2.8% to 104.64 cents per share (March 2022: 107.61 cents per share) and 99.41 cents per share (March 2022: 102.23 cents per share) respectively. However, the REIT’s South African, and European portfolios recorded strong operational performances.
Its local portfolio continued its positive trajectory generating like-for-like net property income growth and (+5.3%) and significant letting activity with approximately 90% of expiring space re-let as well as an achievement of 7.4% vacancies in the office sector.
“Despite the subdued economic backdrop, the South Africa portfolio experienced a reduction in vacancy rates and strong letting across the portfolio. This year’s performance is attributed to our proactive approach as well as providing an exceptional client experience, and implementation of value-add initiatives. Reducing the cost of occupation remains a key focus through the continued rollout of ESG strategies, ultimately enhancing future returns,” commented Head of SA, Graham Hutchinson.
In Europe, the underlying fundamentals continue to support the Pan-European Logistics (PEL) portfolio with demand still outstripping supply. The platform delivered rental growth driven by the ability to capture positive estimated rental value (ERV), resulting in an increase in like-for-like net property income of 7.4%.
“The Eurozone was impacted by the energy crisis and ongoing supply chain pressure as a consequence of the war in Ukraine. That said, to date, the logistics sector has proved resilient, with supply heavily constrained and demand remaining strong. The PEL platform is underpinned by a strong, defensive portfolio that has capitalised on these sector dynamics, capturing 8.6% positive growth on new leases and an increase in occupancy to over 99%. The platform remains well placed to deliver strong income returns as we continue to capture rental growth. Additionally, the quality of earnings will be further enhanced through cost savings initiatives at platform level,” said Head of Europe, Paul Rodger.
The implementation of strategic initiatives saw its loan-to-value (LTV) increase temporarily to 42%. According to the fund, “defined plans, however, are in place to reduce the LTV to below 39.9% in the short-term.”
Overall, its balance sheet remains sound supported by proactive capital and interest rate management which enabled the fund to maintain a dividend payout ratio of 95% with its board declaring a final dividend of 48.32 cents per share for the six months ended March 2023, bringing the dividend for the full year to 99.41 cents per share (March 2022: 102.23 cents per share).
“We are extremely pleased with the fund’s performance over the past twelve months. Despite the heightened macro-economic unpredictability, the operational metrics in the underlying portfolios remain healthy and we are excited about the strategic steps we have taken to position IPF for growth,” commented CEO, Andrew Wooler.