THE JSE Securities Exchange-listed property loan stock company, Spearhead Property Holdings, says it has for the seventh half-year in succession produced results that in terms of return on shareholder capital 'make it almost certainly the most successful company of its kind in South Africa'.

'We have maintained our reputation for being able to produce better-than-average results,' said CEO Mike Flax, 'and have again performed ahead of the blue-chip stocks in our sector, many of which have been disappointing over the last year.'

Headline earnings per unit of 71 cents, are 4% up on those of the same period last year and the distribution per unit at 66c is 5% up. Spearhead listed on the JSE in August 1999.

Any person who purchased a share in early 2000, said Flax, would have enjoyed an annual compound return in excess of 25% and would have seen this investment keep ahead of inflation by a comfortable margin.

'In January 2000 it was possible to buy one of our shares at R6.40. Since then the capital value of these shares has grown by 44% and the yield paid out on the price has been a cumulative 56%.' Four main factors, said Flax, lie behind the company's ability to outperform its rivals.

'The first and possibly the most important is that our management owns 20% of the shareholding. This means we are goal-congruent and have none of the conflicts of interest that have E downgraded the performance of certain other listed property counters.

Those who control Spearhead are locked into it, without ties to external management companies.

'Secondly, being profit-oriented, we have avoided the ever present temptation to grow for growth's sake or for reasons of prestige. We develop or acquire for the profit of Spearhead only.

'Thirdly, soon after we listed we decided we would focus on the Western Cape, an area we know and understand and one which has traditionally been economically more stable than others in South Africa.

Some 85% of our R400 million portfolio is here. 'Fourth, we have, I believe wisely, spread our portfolio within the region and across a diversity of activities: 48% is in retail, 32% in office space and 20% in industrial property.'

Prospects for this year now look good because the cost of capital has been reduced and new developments coming on stream will contribute significantly to bottom line, said Flax.

Spearhead, he said, has recently being able to reduce its gearing from 55% to a more comfortable 51% and has tied R100 million of its R170m debt into improved long-term interest rates at an average of 13%. These reduced rates, which kicked in from January 2003, will bring about a further R2m in savings a year. Prospects will also be enhanced by deals done in the last year.

The 6 000m2 Siltek House bought in 2002 has been converted, upgraded and renamed Eagle Park and is now fully let with LG Electronics and Eagle Freight as the anchor tenants.

Equally satisfactory has been the performance at the Spearhead Business Park in Montague Gardens where phase I of 8 000m2 has been completed and 6 000m2 has now been let while at the 16 000m2 NPA House in Buitengracht Street the contractor Stabilid has five months to go.

The deal, signed with a government tenant, will run for 10 years with a capital value of nearly R85million. In the year ahead, added Flax, Spearhead also expects to benefit from a new joint venture with Lukhanyo, an empowerment company under the leadership of Monde Mbeta which will enable his group to help unlock opportunities presented by the restructuring of property within the public sector.

'These and other factors,' said Flax, 'all point to a good future in the medium term for Spearhead and I am confident that we will not only maintain but will improve on our historic annual growth.'