Synergy, a specialised retail property fund that focuses on medium-sized community and small regional shopping centres in high-growth nodes, listed with only two relatively small shopping centres. The portfolio now includes 14 properties.
The fund reported yesterday that for the six months ended December, distributions for its A-linked units were 40.32c per unit, while B-linked unit distributions were 24.75c per unit.
"In 2012, we started executing a whole series of acquisitions and during the course of 2012 a further 12 shopping centres came on balance sheet. That increased the asset base of the company from about R250m at listing to about R1.7bn now," CEO William Brooks said.
Mr Brooks said the lower end of the market was "the area ... that shows the most significant growth opportunity — there's a structural undersupply of formal quality retail within many of those nodes across the country. There's plenty of growth still to come."
During the six-month period, Synergy's property portfolio value rose 48% from nearly R1.2bn to more than R1.7bn, driven mainly by its acquisition of the 21,542m² Setsing Crescent Shopping Centre in the Free State and the 25,338m² Gugulethu Square Shopping Centre in the Western Cape with a combined market value of R565m.
The fund's occupancy rate improved by 1.2 percentage points during the period to 96.6%. "Around 1.6% of the 3.4% vacancy level is earmarked for refurbishment and redevelopment," Mr Brooks said.
The ratio of national tenants in the portfolio increased from 81.1% to 85.6%.
Effective October last year, Synergy brought its full property management processes in-house, allowing the fund to directly manage its properties, including in-house leasing.
Mr Brooks said the move had "started to pay some strong dividends across the whole operational area".
"It is a significant investment in our business that better aligns management structures to investor objectives and produces many long-term benefits."
The fund would continue to focus on driving operational efficiencies through direct management structures, and maintain its focus on acquisition-driven growth. Synergy is targeting a R3bn to R5bn asset base within the next two to four years, Mr Brooks said.