Ascension Properties reported a "successful" maiden year as a listed property fund‚ having met its distributions forecast and substantially grown its portfolio in the year to June.
Executive director Shaun Rai said the key driver of the fund's success was its strategy for acquiring larger‚ centrally-located commercial office buildings in Johannesburg‚ Cape Town‚ Pretoria and Nelspruit‚ with market or under-market related rentals‚ at yield-accretive prices.
The black-managed and substantially black-owned office fund has a bias towards government tenants‚ with the balance of the portfolio made up of predominantly A-grade private sector tenants and a small retail component.
The fund's investment property portfolio has grown from R600m at listing in June last year to R2.5bn - or R3.2bn including acquisitions not yet transferred. Rai said the portfolio was 68% tenanted by government‚ in line with the fund's strategic focus on this market. He said the company raised over R1.1bn in new capital.
Ascension‚ which has a dual-linked structure‚ met its distribution forecast of 38c per A-linked unit and 18.8c per B-linked unit. The A-linked units have first right to the net distributable income of the fund‚ with distributions growing at 5% a year for the first five years. The B-linked units receive the residual net income of the portfolio.
Portfolio growth
Rai said the company was confident that it could continue to achieve its forecast distributions‚ which for the 2014 are 39.9c per A-linked unit and 22.5c per B-linked unit. This represents a forecast of 5% distribution growth for A-linked units and 19.7% growth for B-linked units.
In June‚ Ascension obtained approval from the JSE for its conversion to a real estate investment trust (Reit).
Rai said Ascension expected to comfortably maintain its portfolio growth of about R1bn a year over the next two to three years‚ although the growth achieved would depend on finding the right assets that are yield enhancing and that match the portfolio.
Ascension said its total vacancies of 8.5% are in line with expectations and present an opportunity for future distribution growth.
Rai said that at the end of June‚ Ascension's loans-to-value ratio was artificially low at 30.5%, adding that this would increase to the target 40% with the implementation of the outstanding property transfers.
Including the outstanding transfers‚ Ascension's portfolio will comprise 28 properties valued at R3.2bn‚ with a total gross lettable area of 301‚432 m².
This translates to an average building value of R115m.
