ApexHi Produces 17% Growth In Annual Distributions

Posted On Wednesday, 01 August 2007 02:00 Published by eProp Commercial Property News
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ApexHi Properties Limited has announced a 17% growth in annual distributions, reporting a combined annual distribution of 285,50 cents (2006: 244,00 cents) and a total annual return of 62% for the year to 30 June 2007

Gerald LeissnerThe fourth quarter’s distribution on the A unit is 33,75 cents and the B unit is 41,25 cents, a total of 75 cents which is the threshold after which the C units start to participate in distributions. The total distribution per A unit for the year amounted to 128,47 cents (2006: 109,80 cents) and 157,03 cents (2006: 134,20 cents) per B unit.

Both the A and B units produced income growth of 17%, while substantial capital growth in all three units provided a boost in total returns. The A units generated a total return of 46% and the B units 66%. The C unit, which does not yet participate in the distributions, showed capital growth of 223% since its listing in October 2007.

ApexHi CEO Gerald Leissner says the core portfolio, which represents properties held for 12 comparative months, reflects growth of 12%. Additional earnings were generated by property acquisitions and disposals during the year, the refurbishing of properties in the portfolio as well as non-core income which amounted to R34,7- million. “ApexHi is an income fund, and it is management’s strategy to enhance distributions by seeking one off gains which will benefit unit holders,” he says.

ApexHi realised a gain of R15,2-million in a profit share arrangement with Matemeku, generated a development fee of R11,5-million following the sale of its 50,1% undivided share in Maxcity and  accrued R8-million in respect of the guarantee fees to be received from Clearwater. ApexHi has guaranteed the repayment of certain loans by Clearwater arising from its acquisition of C units.

A further contributor to the above average results was the reduction in costs. “The ratio of property expenses to conventional rental income reduced from 26% to 24% as a result of cost containment and growth in market rentals. Renegotiated contracts with Otis and Domayne Engineering Services resulted in savings of R6-million.

ApexHi concluded 1,400 leasing deals worth more than R1-billion in the financial year. Leases covering 644,002m2 expired during the year, while leases covering 683,754m2 were concluded, reducing vacancies from 9% to 6%. Rentals on renewals increased 14%.

In the year to end June 2007, ApexHi acquired 18 properties for R690,6-million at an average yield before gearing of 11,6%. The company sold 38 properties for R414,6-million, realising a surplus on original costs of R75,7-million. The property portfolio was revalued, resulting in a fair value adjustment of R2-billion. The property portfolio at end June 2007 was valued at R9,4-billion representing an average forward yield of approximately 11,3%.

Going forward, Leissner says the current portfolio has, on average, rental escalations of between 8% and 10%. Rentals on renewals are expected to be increase by between 10% and 20% and property costs are expected to increase by 7%. Income will be earned from the Clearwater guarantee fee and additional income from acquisitions and possible development fees from the sale of residential units.

“Based on the above, management expects distributions for the 2008 financial year to be between 323 and 337 cents. This means the C unit will earn a distribution for the first time in the first quarter of the 2008 financial year,” says Leissner.

Payment of the fourth quarter interest distribution will be made on 27 August 2007, and the last date to trade cum interest is 17 August 2007.

Last modified on Wednesday, 23 April 2014 19:43

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