Tower Property Fund announces sterling maiden results

Tower Property Fund CEO, Marc Edwards said the company was happy to have beaten expectations in what has been a strong year.

Western Cape-dominated, Tower Property Fund has completed a remarkably successful maiden year as a JSE-listed property loan stock and real estate investment trust (REIT) company.

Tower, which listed on the JSE in mid-2013, announced a maiden annual distribution of 74.6c per unit for the year to May‚ exceeding its pre-listing forecast.

The real estate investment trust‚ which released its financial results for the reporting period on Thursday last week‚ owns a diversified portfolio of 31 commercial and retail properties‚ valued at R2.06bn.

The properties are mainly in the Western Cape‚ with 51% by value lying there‚ and in Gauteng‚ with 42% by value situated there.

Tower is committed to a “greening” strategy to increase the competitiveness and the values of buildings in its portfolio.

Cape Quarter‚ a mixed-use precinct in Cape Town’s Green Point area‚ is Tower’s flagship property.

Green initiatives are reportedly saving Tower about R1m a year at the precinct.

“We are happy to have beaten expectations in what has been a strong year for us‚” CEO Marc Edwards said on Thursday.

Distributable earnings of R96.8m were made during the period.

The group’s net asset value increased from R8.75 to R9.07 per unit over the period.

Its loan to value reduced to 37% and its fixed debt increased to 72%.

Tower is one of Grindrod Asset Management’s top picks to perform well this year‚ and is still on the firm’s radar. “We are pleased with Tower’s maiden results. A property company’s first set of results are always important and are an indicator of whether management delivered on what was promised at listing. Tower have certainly delivered with a good distribution number‚” Grindrod Asset Management portfolio manager Geoff Noble said.

“While we don’t find Tower as attractive as we did a couple of months ago‚ we still favour its long-term prospects and continue to keep it as one of our top picks along with other smaller listed property companies such as Accelerate Property Fund‚” he said.

Tower’s management has years of experience in property and asset management‚ having assembled‚ listed and managed Paramount Property Fund until its sale to Growthpoint in 2006.

The company came to list with R300m worth of assets but it is looking to grow quickly. Its market capitalisation is about R1.2bn and it wants to grow this to R3.5bn by the middle of next year.

Mr Edwards said his goal was to decrease operating costs in the next financial year.

“We believe we can also keep our office vacancies down‚ as we have been doing.

“This is especially impressive as the rest of the industry has struggled with office vacancies‚” he said.