Premium Properties retains distribution growth up 10,3%
Premium Properties MD Jeffrey Wapnick said the strong growth in the residential portfolio underpinned by low vacancies and high demand for quality and secure accommodation contributed significantly to the increase in rental income.
JSE listed Premium Properties which has the highest exposure to residential property, relative to its peers, today announced its unaudited results with distributions up 10,3% to 66,2 cents a unit for the six months ended August 2013.
With a diverse portfolio of assets totalling R5 billion and a market cap of R3,1 billion, Premium also attained REIT (Real Estate Investment Trust) status which is effective starting from March 2014.
Commenting on the results, Premium Properties MD Jeffrey Wapnick said the strong growth in the residential portfolio underpinned by low vacancies and high demand for quality and secure accommodation contributed significantly to the increase in rental income.
The fund’s rental income and net rental income increased by 10,5% and 6,4% respectively. Bad debts, write-offs and provisions decreased from 1,4% to 0,4% of total tenant income. Arrears and doubtful debt provisions remained at acceptable levels and no significant deterioration is anticipated.
The percentage of cost recovery from tenants was maintained during the year despite rapidly escalating utilities charges.
Premium had three major projects under construction for the period, totalling approximately R86,8 million of which R58 million had already been spent by 31 August 2013.
“We have seen a significant increase in demand for well located residential accommodation in both Pretoria and Johannesburg CBDs. Not only have the close proximities to the Gautrain stations added significant value, but revived interest by both private and government businesses has propelled the need to enhance our offering," added Wapnick
Premium also benefited from the investment in IPS Investments Proprietary Limited (“IPS”) which provided strong growth with profits earned from the associate company, excluding fair value gains, increasing 40,6% on the prior period to R14.5 million.
The company’s loan to value ratio as at 31 August 2013 was 33,7% of the total value of the investment portfolio compared with 31,5% as at 28 February 2013. Interest rates in respect of 41,7% of borrowings have been hedged, maturing at various dates ranging from May 2017 to August 2018. The weighted average annual cost of debt was 7,8% with unutilised banking facilities in excess of R431,8 million.
“We successfully launched a R1 billion Domestic-Medium-term Note Programme in March 2012 which resulted in significant savings in finance costs. Earlier this year, we increased our debt capital market issuance to R465 million or 28% of our borrowings and following this Global Credit Ratings upgraded our long and short-term ratings to A- (ZA) and A1-(ZA) respectively.
“We are well positioned to continue to take advantage of opportunities in the CBDs supported by the high demand for safe, clean and affordable accommodation, favourable market conditions for CBD ground floor retail space with the return of food and fashion retailers to the city centres and infrastructure expenditure by Government,” Wapnick concluded.
The Wapnick family are the architects behind Premium as well as sister companies Octodec Investment, which is listed, and IPS.
