Company puts Premium on Pretoria

Posted On Friday, 22 November 2002 10:01 Published by eProp Commercial Property News
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A Narrow geographical focus is considered a weakness in the property sector, but Premium Properties is boasting about its 98% exposure to Pretoria on the basis that every property in the portfolio is never more than 20 minutes drive away.

Jeffrey Wapnick'This allows us an intimate understanding of our portfolio and a hands on management approach,' Premium fund manager Jeffery Wapnick said yesterday.

The Pretoria-focused property loan stock company, with a 2% exposure to Johannesburg, was last valued at R493,4m.

About 46% of Premium's portfolio is retail properties, 24% offices, 9% industrial and 21% residential.

The residential portion is another potential problem for this portfolio, but Wapnick defended the residential exposure by saying it came with reduced risk compared to general commercial properties.

This is because residential buildings are not reliant on a single large tenant whose departure may cause a collapse of income for a building.

Wapnick said Premium's venture into the residential market was a response to huge demand for secure and quality rental residential stock in central business districts (CBDs).

The group had so far purchased office buildings and converted them into 800 residential units.

Wapnick said the nonreliance on a single large tenant applied to many of the group's office buildings that housed small tenants in the Pretoria city centre.

He said that future expansionary moves were likely to maintain the focus in Pretoria, but that other opportunities like a reverse listing of an institutional portfolio into Premium would also be considered.

Premium group boosted its portfolio mainly through acquisition from R461,8 to R493m in the six months ended August.

The group reported capital commitments of about R15,8m in respect of a development, which will be financed through loans.

Gearing was quoted at just more than 50% at the end of the interim period which produced turnover of R46,5m up from R43,6m.

With vacancies of 10,8%, interim headline earnings fell to 13,3c a linked unit from 14,9c of the previous interim results.

Wapnick cited the increase in interest rates as a reason for the decline in attributable earnings. The situation was not expected to improve in the second half of the year to end February , which meant fullyear earnings would come in flat if not slightly below last year's level.



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