Arrowhead Properties‚ which has been listed on the JSE for a year‚ said on Monday (26 November) it had achieved all the objectives it set for itself and intended to grow its asset base by at least 30%‚ increase market capitalisation to R3bn and achieve 10% growth in combined earnings.
Gerald Leissner told Business Day the company's first year on the JSE had been "fantastic" after improving the quality of the portfolio.
"Part of our strategy and focus has been acquiring yield-enhancing properties in order to grow income. The management team has been disciplined in cost controls‚ efficient rental renewals and yield-enhancing acquisitions. We are delighted with this first year's performance‚" Leissner said.
Arrowhead announced a distribution of 100.58c per unit for the year to September‚ which was 2.2% higher than the initial annualised forecast of 98.4c per unit for the year.
The asset base grew R750m or 50% and the market capitalisation almost trebled from R800m to R2.2 bn.
Arrowhead was listed with a market capitalisation of R800m after Redefine Properties unbundled properties it did not want into the new fund.
The company had bought 96 properties valued at R1.7bn from South Africa's second-largest property group‚ Redefine Properties‚ and had borrowed R800m from Standard Bank. Its plan is now to grow its portfolio to R10bn within the next five years.
The company now owns 107 properties spread across the country with the portfolio comprising 43% offices‚ 38% retail and 19% industrial.
Leissner said the company was "positive" about the pipeline of acquisitions it had lined up.
"Our pipeline is looking healthy and we are pleased with the quality and yield-enhancing opportunities available in the market‚" he said.
Arrowhead now has a 13% vacancy rate‚ down from 18% when it listed.
The company credits the improvement in vacancies largely to the acquisition of properties with higher occupancy levels‚ although there has been success in letting vacant space.
With gearing levels subsequently reduced to 28%‚ Arrowhead intends to access its debt facilities or use a combination of debt and equity to fund acquisitions.
Leissner said with lease escalation rates ranging from 6% to 12% a year‚ he expected that growth from existing leases would average around 7%.
Arrowhead's A and B units combined achieved a total return of 40.6% which was well above the market average of 33.23%.
The Arrowhead A and B unit structure caters for investors with different risk and reward appetites‚ with the A units for risk averse investors‚ earning distributions of 15c or 50% of the distributable income per quarter‚ whichever is greater and the B units‚ for investors with a greater appetite for risk‚ earning the balance.
Source: Business Day via I-Net Bridge
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