Putprop declares dividend distribution up 9.1%
Listed property investment group Putprop (PPR) on Friday reported that its dividend distribution for the year ended June increased by 9.1% to 36c per ordinary share.
Putprop said the results “were extremely pleasing” given the effect of the negotiated reduced rental income stream arising from the new head lease signed with the group’s major tenant.
Strategically‚ Putprop renegotiated leases with its major tenant‚ Larimar Properties‚ although at a reduced rate and for a shorter tenure.
Across the local commercial property market‚ operating conditions remained difficult‚ with rising vacancies‚ longer collection times and a deterioration of rental escalations on new leases and renewals‚ the group said.
While Putprop “was not immune to the effects of these market conditions”‚ it said it was “fortunate to have a stable portfolio of mainly listed national and blue chip tenants‚ allowing greater protection” against various market challenges.
During the year‚ Putprop’s profit before tax increased 42.9%‚ while headline earnings increasing from 74.1c per share to 86.8c per share. Group net profit was up by 66.7% to R50.1m.
Putprop said while it had actively pursued acquisitions during the year‚ as part of its objective of diversifying its property portfolio further into industrial and retail properties and reducing the risk of its dependence on its major tenant — Putco‚ “no acquisitions materialised”.
At period-end‚ the group’s property portfolio consisted of 15 properties mainly in Johannesburg and Pretoria‚ with a total value of R281.3m. This was up from R250.3m a year earlier.
Putco said the performance of its portfolio during the year “was strong”‚ with average annual property yields of 9%.
The group would continue pursuing acquisitions of suitable industrial‚ retail and commercial properties “to improve our income streams”.
Putco’s “substantial cash resources” of R31.8m would‚ together with the board’s recent decision to make use of limited gearing‚ “allow the group to consider property acquisitions of a more substantial nature”.
“We believe property fundamentals will remain relatively stable”‚ although trading conditions in the year ahead were expected to remain challenging.
The group said it was in discussions with several parties to investigate the possibility of developing some of its well-located properties into large retail outlets or residential areas‚ “with a view to unlocking greater value”.
The Putco board said it was confident that the group would be able to maintain its current level of distributions to shareholders in the coming year.
