Premium Properties bucks trend to grow distribution

By
Font size: Decrease font Enlarge font
Premium Properties MD, Jeffrey Wapnick says the increase in distributions of 19,4% for the year is well ahead of sector average growth and represents an excellent performance. Premium Properties MD, Jeffrey Wapnick says the increase in distributions of 19,4% for the year is well ahead of sector average growth and represents an excellent performance.

JSE-listed property group, Premium Properties has reported distribution of 150,7 cents per unit for the six months ended February 2014, up 19.4% from 126.2c achieved in the comparable period a year earlier.

Commenting on the results on Tuesday last week, Jeffrey Wapnick, Managing Director of Premium Properties said the increase in distributions of 19,4% for the year is well ahead of sector average growth and represents an excellent performance.

Premium and its sister company, Octodec, are unique players in the listed real estate space given their significant exposure to the residential sector‚ which is more management-intensive than other sectors.

Premium’s rental income and net rental income increased by 13,1% and 13,7% respectively. The residential portfolio comprising 28,8% of the total property portfolio by rental income, achieved strong growth underpinned by low vacancies and high demand for quality, secure and affordable accommodation.

Bad debts, write-offs and provisions decreased from 1% to 0,5% of total tenant income. Arrears and doubtful debt provisions remained at acceptable levels and no significant deterioration is anticipated.

In the period the property group completed three major projects with a fourth still under construction. The total cost of these projects is approximately R124,3 million of which R89,6 million had already been spent by 28 February 2014.

The projects included:

- the construction of an additional residential block on the last remaining open space at The Fields in Hatfield, Pretoria which was completed in February 2014 at a total cost of R68,6 million, creating a further 87 residential units and 87 parking bays.

- the redevelopment of the mixed-use property Silver Place, situated in Silverton, Pretoria progressing from the first phase residential component, completed in early 2013 which saw the construction of a further 82 units as well as the revamp of existing units to the second phase retail component which is expected to be completed in early 2015. The total cost of the project is R40,4 million.

- the upgrade of Prinsman Place, a residential property, at a total cost of R8 million and a R7,3 million residential and retail upgrade to the Demar Building, completed in September 2013 and October 2013, respectively. Both buildings are located in the Pretoria CBD.

Premium took transfer of The Hangar in Centurion in July 2013 for a purchase consideration of R114,7 million.

In addition, Volksbank situated in the Pretoria CBD was transferred to Premium on 8 November 2013 for a purchase consideration of R19,4 million. The construction of a high end residential development will commence in October this year at a total estimated project cost of R129,7 million.

During the year Premium increased its investment in associate company IPS Investments to 50%. IPS delivered another solid performance with profits increasing by 51,7% to R33,6 million.

Vacancies excluding properties held for redevelopment, amounted to 13,2% (2013: 13,9%) of total lettable area.

A saving in finance costs was achieved mainly due to the establishment of a R1 billion Domestic Medium-term Note Programme during March 2012.

Premium's loan to value ratio at year end was 36,1% of the total value of the investment portfolio (2013: 31,6%). Premium entered into various fixed interest rate and swap rate agreements and in terms of these, interest rates in respect of 58,3% of borrowings have been fixed with expiry dates in 2017 and 2018. As at 28 February 2014, the weighted average annual cost of debt was 8,2% with unutilised banking facilities of R528 million.

Premium increased its debt capital market issuance to R775 million, or 40,7% of borrowings. In August 2013 Global Credit Ratings upgraded the long- and short-term national scale issuer ratings of Premium to A- (ZA) and A1-(ZA) respectively.

“The granting of REIT status to Premium from 1 March 2014 further paves the way to drive the merger between Premium and Octodec and we will provide further details in the coming weeks.

"As previously indicated, we believe that a combined entity makes strategic sense in that it will simplify the corporate structure, free up management time and create a more sizeable company with increased liquidity and clout in the sector,” concluded Wapnick.


NEWSLETTER — GET THE LATEST NEWS IN YOUR INBOX. SIGN UP RIGHT HERE.


Enter your e-mail address below using Lowercase.



Home in 1 | Leading Supplier to Events, Catering & Hospitality Industry