Premium Properties reports 16,8% growth in payouts to investors

Posted On Monday, 26 April 2010 02:00 Published by eProp Commercial Property News
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Premium Properties Limited announced a total distribution of 59,20 cents per linked unit for its second six-month period, ended 28 February 2010, bringing its total distribution for the full year to 111.1 cents per linked unit, up a noteworthy 16,8% from that of the prior year

Jeffrey WapnickPremium Properties is a JSE listed property company which derives its revenue from rentals receivable from property investments.

Continuing its impressive growth record, Managing Director of Premium Properties Limited Jeffrey Wapnick attributes its positive results to the performance of its Pretoria and Joburg CBD property portfolio, specifically residential and office properties, and he also points to benefits gained from decreases in the prime lending rate during the year.

“This year represented a vastly different trading environment to that experienced during the previous year. Despite a more challenging context, Premium Properties continued to benefit from the pro-active approach to letting, the substantial investments made over several years in the growth of our CBD portfolios and the upgrade and redevelopment of properties,” says Wapnick.

Rental income and net rental income from Premium’s portfolio increased by 17,4% and 12,3% respectively, compared with the comparable period. Property expenses increased to 41% of rental income largely due to an increase in municipal costs as well as costs of repairs and maintenance. “In spite of market pressures, arrears and bad debts remained at an acceptable level and no significant deterioration is anticipated,” notes Wapnick.

Premium’s property portfolio, valued at R3,1 billion, consists of mainly multi-tenanted buildings situated predominantly in the Pretoria Central Business District with further holdings in Hatfield, Silverton and Johannesburg Central Business District. The portfolio spans commercial, retail, industrial and residential properties.
The performance of Premium’s residential and office properties contributed significantly to its distribution growth

The residential portfolio, which comprises 3,062 units, delivered strong growth in rental income of 9% underpinned by low vacancies and keen demand for affordable, secure accommodation. Premium’s investment in The Fields mixed-use development in Hatfield, Pretoria made a substantial impact on distribution growth resulting from its much improved occupancy levels achieved during the year.

“Premium Properties continues to focus on its strategic objective of acquiring properties in the Pretoria and Johannesburg CBD’s as well as its ongoing programme of upgrading properties,” notes Wapnick. During the year Premium purchased six properties situated in the Pretoria CBD for a total purchase price of R84 million, while R55 million was invested in on various upgrades to properties.

Amongst its new developments, Phase II of The Fields in Hatfield continued during the period. The project includes a four-level parkade, 9,000sqm of “A” grade offices and retail space as well as a hotel, with investment totalling R285 million. The R55 million conversion of Longsbank Building in the Joburg CBD is scheduled for completion in June 2010, at a yield of 11%.

“Premium Properties will continue to benefit from the upgrades and redevelopment activities which will continue to impact positively on the distribution growth for the 2011 financial year,” says Wapnick. “We are optimistic that Premium will continue to deliver distribution growth which is in line with the sector standard.”

Income received from Premiums’ associate company IPS increased to R16,9 million due to the strong performance of this R1 billion property portfolio. IPS has a total of 2 732 residential units of accommodation, with a committed development pipeline to build in excess of a further 700 units. The majority of these units will be built at Kempton City in Kempton Park and at Lara’s Place situated in the Johannesburg CBD. However, resulting from the anticipated phased take up of these new units, a decrease in income from IPS is forecast for the next financial year.

Resulting from a slowdown in economic activity during the period, vacancies have risen by 4% in the portfolio, however a large percentage of the vacancies can be attributed to properties that are undergoing redevelopment or new acquisitions.

Premium’s gearing at 28 February 2010 was 33,3% of the total value of the portfolio against 30,8% at 28 February 2009. Interest rates in respect of 41% of borrowings as at 28 February 2010 have been fixed at an average interest rate of 12% maturing at various dates ranging from May 2010 to April 2018.

Last modified on Saturday, 26 April 2014 14:40

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