Fountainhead Property Trust chairman Michael Kirchmann hailed last year as a "momentous year" for Fountainhead, which gained a new majority shareholder and management structure and also put initiatives in place to position the trust "for its next phase of growth".
Last year saw the conclusion of a drawn-out tussle between Growthpoint Properties and Redefine Properties for Fountainhead's R11.1bn portfolio, which ultimately ended with Redefine acquiring the majority of Fountainhead's shares. Mr Kirchmann said in the trust's annual report, which was published yesterday on the company's website, that the bidding war resulted in professional costs of R12m, which shaved 1% off Fountainhead's potential distribution growth. "But under the circumstances these were fees well spent," the chairman said.
Fountainhead, whose portfolio includes a number of shopping centres such as Centurion Mall, Blue Route Mall and Benmore Gardens, in October reported a 2% drop in distributions to 50c per unit for the 11 months to August 31 year on year. The 11-month reporting period was a result of Fountainhead changing its financial year-end from September 30 to August 31. The 2% slide in income payouts was in significant contrast to a more positive sector average.
Mr Kirchmann said the overall macroeconomic environment worsened during the year "and shows little signs of improving in the forthcoming year, presenting a challenging backdrop for the property market". However, Fountainhead expected to realise savings of R5m in this financial year from allocating property management responsibilities to Fountainhead Property Administration, which is wholly owned by the new parent company, Redefine. Mr Kirchmann said Fountainhead would continue to dispose of properties which no longer "fit our requirements". Meanwhile, committed and planned improvements to the trust's portfolio were valued at more than R1bn.
Mr Kirchmann said while consumer spending could level off, these improvements would reap rewards "due to the strategic location of these retail centres".
