Newpark REIT has posted its interim results for the six months ended August 2024, having extended its lease with the JSE to December 2030 and increasing its WALE to 5.8 years.
The Group’s portfolio comprises four properties, two located in Sandton (the JSE building with a GLA of 18 533m2 and an adjoining mixed-use asset, 24 Central, with a 16 526m2 GLA). Its third asset is in Linbro Business Park with a 13 713m2 GLA and its fourth in Crown Mines with a 11 277m2 GLA. The combined valuation of these assets as at 31st August 2024 was R1.042 billion.
Revenue for the period was R68.8 million, a slight increase of 0.1% when compared to the same period in FY2024 with its operating profit (before fair value adjustments) R46 million – down 5.9% predominantly due to increased property and administration costs.
During the period, there was a R2.5 million downward adjustment in value on the interest rate hedges and a downward adjustment of R13.4 million on investment properties. Allowing for fair value adjustments, and the net cost of finance, the total comprehensive profit for the period was R8.3 million (FY2024 loss: R42.1 million), representing a profit per share of 8.33 cents (H1 FY2024 loss: 42.12 cents per share).
Funds from operations (FFO) were 35.50 cents per share, representing a 11.7% decrease from the same period in FY2024. The decrease has been attributed to the reversion in rentals at HellermannTyton and increased property and administration costs. The negative impacts were partially offset by escalations in rentals at the JSE and Crown Mines assets as well as increased retail occupancies (and advertising income) at 24 Central.
Following the extensions of the HellermannTyton and JSE leases, which commenced on 1st January 2024 and 1st August 2024 respectively, the Group’s weighted average lease expiry (WALE) (by GLA) for the portfolio increased to 5.8 years.
Newpark’s balance sheet remains sound with a loan-to-value ratio (LTV) of 41.7% (FY2024: 41.1%). Its debt facilities of R150 million will mature in May 2025 and have been reflected under current liabilities. The Group says management is engaging with its debt providers to extend the maturity dates of the facilities. Its weighted average cost of funding, following the maturity of the interest rate hedges, is 9.3% (31st August 2023: 9.26%) with hedges remaining in place for 63.8% of the Group’s drawn debt exposure as at 31st August 2024.
Newpark declared an interim dividend of 30 cents per share, a decrease of 14.3% compared to the 35 cents per share for the six months ended 21st August 2023.
