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Investec Australia Property Fund posts healthy results


Investec Australia Property Fund (IAPF) on Thursday increased its distributable income to unit holders, underpinned by returns derived in hard currency.

In rand terms, the fund declared a 29.3% rise in total distribution growth for the year ended 31 March 2016.

The fund, listed in Johannesburg but domiciled in Australia, reported a full-year distribution of AUD 9.17c per unit for the year, up 12.1 per cent from previously.

Commenting on the results, IAPF CEO Graeme Katz said the persistent Rand depreciation against the Australian dollar enhances the Fund as a Rand hedge for investors.

The company currently has a portfolio of 19 office and industrial properties, which have 100 per cent occupancy.

It completed A$127m of property acquisitions during the year, which, along with new valuations, contributed to the increase in the portfolio value to A$494m. This represents growth of 3.8 times since listing in October 2013.

IAPF has delivered a total return of 67.8% since listing three years ago.

"IAPF still trades at a discount to its Australian and inward-listed peers, providing a compelling entry point into a business that provides above-market returns in hard currency," Katz said.

The fund’s performance was praised by analysts. "Investec Australia Property Fund is a very compelling story for investors seeking Australian dollar yield. Compared with Australian peers, they offer a strong forward yield of 8.1% in the currency, versus their peer average of 5.5%," said head of Ma’alot Investments, Maurice Shapiro.

He said the fund was well-insulated against Australian economic risks. "Although we have concerns around the Australian economy’s dependency on resources, (IAPF) has a 6.1-year weighted average lease expiry and a 100% occupancy rate, so they are well-positioned to weather any macroeconomic turbulence," Shapiro said.

The Board expects distribution growth in FY 2017 of between 6% and 8% pre WHT in AUD depending on the level of capital deployment in the coming 12 months.