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CIREF delays projects after R400m loss

Posted On Monday, 24 November 2008 02:00 Published by
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UK-based property fund CIREF, which has a significant SA shareholding, reported a net loss of more than R400m in a depressed UK property market.

Loyiso Sibali

Property Reporter

UK-BASED property fund CIREF, which has a significant South African shareholding, reported a net loss of more than R400m in a depressed UK property market.

The company said on Friday it had to put certain developments on hold since banks had become more stringent on lending because of the credit crisis.

Gavin Tipper, chairman of CIREF, said the de-rating of property as an asset class in the UK might lead to a number of companies failing, but he was confident that CIREF would weather the storm.

CIREF, which is managed by Corovest International’s property fund, is listed on the London Stock Exchange’s AIM Market. On Friday it reported a net loss of R406,6m for the year to September, compared to a net profit of R76,3m in the previous year.

The net loss per share was R5,76 for the year-end. The net asset value per share fell 25,8% to R17,52.

Mike Watters, CEO of Corovest International, said certain development projects had been put on hold until stability returned to the markets.

The credit crisis had negatively affected the market, prompting banks to restrict lending. He said the company’s healthy cash position was a major advantage and that the group would continue acting defensively to conserve cash and reduce expenditure.

The group ended the year with a positive net cash position of R281m.

Watters said he was positive about future market performance in the wake of the Bank of England cutting interest rates by 150 basis points.

“The expectation of further interest rate decreases is expected to buoy property yields. Once markets normalise, the group is well placed to pursue acquisitions using the lower interest rate environment to our advantage,” said Watters.

Source: Business Day

Publisher: I-Net Bridge
Source: I-Net Bridge
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