In its maiden annual results after listing on the London Stock Exchange’s AIM Market in May 2006, CIREF has delivered a 14,4% return on weighted average shareholder funds for the year to 30 September 2006.  CIREF is Corovest International’s property fund which has significant participation by South African investors. The company raised R410,3 million (£28,2 million) on listing and has since completed a number of major acquisitions significantly boosting its property portfolio. 

Net profit of R33,4 million (£2,3 million), up 17,4% from the unlisted predecessor fund’s pro forma results for 2005, exceeded expectations and will enable CIREF to meet its first target dividend to shareholders of 31 cents (2,11p) a share. Earnings per share rose 41,1% to R2,29 (15,72p) with net asset value per share at R20,87 (143,45p).

Corovest International CEO Mike Watters says: “The pleasing results are primarily attributable to the strong property markets in all the geographical regions in which we operate.”  The successful listing on AIM also contributed to the results by enabling the fund to capitalise on real estate opportunities across Europe and the UK. 

At year-end CIREF’s portfolio consisted of 16 fixed and listed property assets located throughout the UK, Europe, the Channel Islands and the British Virgin Islands. “The diversity of the portfolio is critical to our strategy of providing strong investment returns through balanced exposure to lower risk income-generating assets and investments providing a higher capital return,” says Watters.

During the year CIREF invested R29,2 million (£2,01million) in a vacant property in Ashtead, a stockbroker commuter-belt town in Surrey, to begin a mixed-use development.  More recently CIREF bought-out its joint venture partner in its portfolio of 29 Kwik-Fit tyre outlets for R33,3 million (£2,3 million). “The Kwik-Fit properties generate strong rental income streams for the fund and also offer exposure to sites with attractive asset management opportunities,” says Watters.  Providing CIREF with an entry to the UK care home property market, the fund further invested R21,8 million (£1,5 million) in a consortium which acquired the Four Seasons Health Care Group.

Acquisitions during the year were balanced by the sale of non-core properties totalling R153 million (£10,5 million).

Development at the Houndshill Shopping Centre in Blackpool, in which CIREF has an effective 31% interest, began during the year with the centre expected to open in mid-2008. A number of other projects continued including mixed-use developments in Banstead, Petersfield and Swansea.

The UK component of CIREF’s portfolio recorded a total return on investment of 16,3% for the year compared with the 20,7% reported by the UK Investment Property Databank. Watters attributes the discrepancy to two of the fund’s major properties - Newport and Crewe - being partly vacated during the year for redevelopment, which temporarily reduced rental income.

Post year-end CIREF has acquired a 36% interest in a mixed-use retail development in the Wakefield town centre in South Yorkshire, estimated to be worth R3 billion (£215 million) on completion.  The fund has also bought a one-third stake in the R729,6 million (£50,2 million) Birchwood Shopping Centre in Warrington, North West England and a 50% interest in ‘26 The Esplanade’, an office development in Jersey.  “These acquisitions are expected to entrench CIREF’s status as a specialist in retail developments in underutilised town and city centres,” says Watters.

A number of the other mixed-use retail projects in which CIREF has an interest are set to begin development in 2007 and are due for completion in 2009/10. These include the Friars Walk development in Newport with an estimated total end value of R3,2 billion (£220 million) and the Delamere Place project in Crewe valued at an estimated R2,6 billion (£180 million) on completion.

Looking ahead CIREF Chairman Gavin Tipper says that “the UK and European real estate markets continue to be driven by strong investor demand.  With our strong pipeline we are well-positioned to take advantage of a market in which property is offering investors strong relative risk-adjusted returns.”

Tipper says the fund will continue looking at acquisitions that complement the current portfolio and will consider increasing its stake in existing investments. “CIREF’s growth strategy will also see it continue to expand its geographical footprint – to this end a number of potential acquisitions are being assessed in Europe,” he concludes.

SA investors make up a substantial portion of CIREF’s shareholding with 18% held by JSE-listed property loan stock Redefine Income Fund.  The share closed trade yesterday at R22 (£1,52), compared with the then R16,80 (£1,40) at which investors bought in pre-listing.  The company’s market capitalisation now stands at R782,6 million (£53,8 million). 

Issued by: Envisage Communications
Nicole Sacks
(011) 325 5944/083 287 2771  

On behalf of: Corovest International Limited
Mike Watters, CEO
(+ 44) 207 389 8840/(+ 44) 7762 084 035
AND
Ciref Limited
Gavin Tipper, Chairman
(021) 683 3829/(082 490 6487)

For Corovest International UK:  Powerscourt
Victoria Brough
(+44) 207 236 5615/ (+44) 7967 044840