Capital Property H1 distribution per unit up 6.91% to 35.58c

Posted On Friday, 02 August 2013 10:12 Published by eProp Commercial Property News
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Capital Property Fund share price closed almost 1% higher at R10.42 on Wednesday after the fund reported growth in distributions for the six months ended June at the upper end of its initial forecast, and also revised its full-year guidance upwards.

Barry StuhlerThe fund posted a 6.91% distribution rise over the same interim period last year — with an interim distribution of 35.58c per unit for the period at the top end of its 4%-7% guidance.

MD Barry Stuhler said the strong performance was driven by Capital being "slightly ahead on our property rentals", and a reduction in vacancies.

The fund had also benefited from solid performances from its equity investments — particularly its offshore investments in New Europe Property Investments and Rockcastle Global Real Estate Company — which benefited from the weakening rand.

The fund revised its forecast for its full-year distributions upwards from 4%-7% to 6%-9%.

Mr Stuhler said Capital, which had become a major developer due to the lack of quality stock available to buy in the market, was focusing on logistics warehouses and premium-grade office developments. During the period, Capital disposed of a number of smaller retail and office properties. Logistics properties now make up 53% of Capital’s portfolio by value.

Mr Stuhler said the fund would not sell its large retail properties, but would "aggressively grow the logistics area" with the development of predominantly large, standardised warehouses. It would also develop premium-grade office properties.

Capital’s on-the-go projects were valued at R400m, while its substantial pipeline was valued at R3.9bn. This included a planned R1.4bn premium-grade office development in Sandton.

The fund’s planned construction of Clairwood Logistics Park in Durban, which would be between 40,000m² and 100,000m², would cost about R2bn. Capital intends to convert Clairwood Racecourse into a warehousing and logistics park.

Capital reduced its total vacancies from 5.9% at the end of December to 5.1% at the end of June, thanks to redevelopments and other "acute asset management" initiatives, Mr Stuhler said. Following a number of asset sales, Capital’s gearing had reduced to 21.3%, although Mr Stuhler said the fund was comfortable for gearing to increase to about 35%.

Executive director Andrew Teixeira said Capital was busy with rezoning at Clairwood Racecourse, and the existing lease agreement ended in August next year, meaning development could only begin thereafter.

The fund’s retail properties were trading "fairly well", with a large part of the 5.2% retail vacancies due to redevelopment at Pineslopes Shopping Centre.

Last modified on Thursday, 17 April 2014 12:39

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