Synergy announces strong interim results ended 31 December 2011
Synergy Income Fund has registered a profit of more than R17.2 million for the six month period ended 31 December 2011.
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Synergy Income Fund, a specialised retail property fund focused on mid-sized community and regional shopping centres, listed on the Johannesburg Stock Exchange on 14 December last year. The Fund took ownership of the initial portfolio of four properties during October and December 2011. These acquisitions resulted in a fair value gain of R32.1 million representing a 9.58% premium to the acquisition cost.
The Fund has separately listed A- and B-linked units, each offering investors a different risk and reward profile. The A-linked units have a preferential entitlement to distributions, with an initial one-year forward distribution yield of 9.4% and annual distributions that escalate at 5% until 30 June 2017 and thereafter at the lower of 5% and CPI. The remaining distributable income, after the payment of distributions to A-linked unit holders, accrues to B-linked unitholders.
Prior to the listing, Synergy declared a distribution of 9.3 cents per B linked unit to the holders of the 60 million linked units in issue. At 31 December 2011 there were 24.9 million A linked units and 73.1 million B linked units in issue. The distribution for the second half of the financial year ending June 2012 will be paid out together with the amount accrued for the 18 days post listing to the end of December 2011.
Synergy continues to focus its acquisition strategy on the high-growth low-LSM sector of the consumer market, an area that independent research has shown to offer strong growth prospects. ‘We are well advanced with the establishment of our specialised retail portfolio,’ explains CEO William Brooks. ‘As at 31 December we had four properties in the portfolio, another property transferred in February this year and we currently have a further nine properties in various stages of transfer into the Fund. Two of these, Setsing Crescent in the Free State and Gugulethu Square in Cape Town, were announced in the past week for a total purchase consideration of R530 million. These acquisitions will increase our gross lettable area to more than 176 800m2 and bring the combined value of our portfolio to over R1.7 billion, further strengthening our specialised retail offering in the listed property sector.’
‘I am very pleased with our progress to date,’ said Brooks. ‘Operating performance of the initial portfolio of five properties is in line with expectations and the nine properties coming into the portfolio are all located in high-growth lower LSM nodes. We have bolstered our operational team with the addition of some experienced management with considerable retail property experience and our property management partnership with Spire is producing positive results. Our focus in the short term is to effect the successful transfer of the acquisition pipeline and deliver investor value through ensuring strong operational strategies and controls. We continue to also focus our attention on value-enhancing growth opportunities presented in the lower-LSM retail space.’