Arrowhead market capitalisation trebles to R2.4 billion

Arrowhead Properties Chief Operating Officer Mark Kaplan said that the company intends to increase its market capitalisation to R3 billion this year

Arrowhead Properties has delivered on its promise to aggressively grow the portfolio with yield-enhancing assets, aiming to increase its market capitalisation to R3 billion this year.

The JSE listed property company has over the past few months made significant progress in its acquisition strategy that is aimed at growing the portfolio by R660 million, or 30%, in its current financial year.

The company, today announced that it would acquire 15 quality and yield enhancing office, retail and industrial properties from various sellers. The properties to be acquired are located in Gauteng, Kwazulu-Natal, North West Province, Free State and the Northern Cape.

The combined purchase consideration of R489 million will have an average net yield of 11% and will be funded through debt, with the cost of funding at approximately 9% per annum.

“We are pleased with the addition of these properties to our portfolio,” COO, Mark Kaplan, commented.

Arrowhead, the only property stock to pay quarterly distributions, last year in August announced income payouts slightly ahead of forecasts, which no doubt also pleased the market.

Mr Kaplan told SA Commercial Prop News that he believes these properties offer good value at an attractive yield, which will enhance the earnings and growth prospects of Arrowhead.

After concluding this transaction Arrowhead will own a portfolio valued at R2.9 billion with debt of R950 million.

The company has trebled its market capitalisation to more than R2.4bn since listing in December 2011.

“We intend to continue growing the portfolio, but not at the expense of yield. Our aim is to increase our market capitalisation to R3 billion this year,” Kaplan concluded.

It is expected that Arrowhead will achieve an increase of 10% in distributions to R1.11 per combined A and B unit for the year ended September 2013, i.e 60 cents for the A unit and 51 cents for the B unit.

Arrowhead Properties was established through an unbundling of a portfolio of 98 properties from Redefine Properties in November 2011 and subsequently listed on the JSE main board on Friday, 9 December 2011.

The company, led by industry veteran Gerald Leissner with 47 years’ worth of experience in the listed property sector, who came out of retirement last year to run Arrowhead. Leissner built up a formidable track record as CEO of ApexHi Properties, which was merged with Redefine in August 2009.

Redefine Properties' decision to unbundle a R1,5bn portfolio of older, smaller buildings into new listing, has turned out to be a resounding success.

The company reported a distribution of 100.58c per unit for the year to September 2012, which was 2.2% higher than the initial annualised forecast of 98.4c per unit.