JSE-listed Investec Property Fund (IPF), with assets in SA and Europe, has reported a strong set of results underpinned by healthy portfolio metrics amid a challenging global economic environment.
CEO Andrew Wooler told Business Day that despite global uncertainty IPF performed well in the 12 months to end- March.
“We have built a strong asset base in SA and Europe, and coupled with the strategic steps we’ve taken to position the fund — the business couldn’t be in a better position from an operational perspective than it is now,” Wooler said.
IPF, which listed in 2011, has a portfolio valued at R23.5bn of direct and indirect investments in SA and Europe. About 56% of the fund’s asset base comprises offshore investments with 83% interest in a Pan-European Logistics (PEL) portfolio of about €1.1bn asset value.
During the reporting, IPF increased its stake in the PEL platform from 64.2% in 2022 to 83.2%, increasing its exposure to an offshore logistics portfolio. The fund also entered into a 50/50 joint venture with Australian funds management business Irongate, enabling IPF to grow its revenue base.
At a general meeting on May 17, shareholders approved the internalisation of IPF’s asset management function in support of the fund’s ambition to build an international real estate fund and asset management company.
Its diversified SA portfolio of 79 industrial, retail and office properties saw vacancies drop from 4.5% in 2022 to 3.9% as leasing activity picked up, with like-for-like net property income growth of 5.3%.
The European portfolio continues to experience growing demand that is outstripping available supply of logistics assets, resulting in 8.6% positive growth on new leases and an increase in occupancy to over 99%.
Wooler said though transaction acquisitions increased the loan-to-value to 42% from 38.3% in September, the balance sheet remained strong, and there were plans to reduce this to a target of below 39.9% in the short term.
The 2024 financial year would mark the evolution of the fund from a property investment business into an international real estate fund and asset management company, he said. In the long term, the focus would be on rolling out of a capital-light fund management model and exploring development pipeline opportunities in Europe.
“Our immediate focus will be on maintaining the stability of the current portfolio and enhancing the quality of recurring earnings,” he said.
IPF’s distributable income per share was down 2.8% to 104.64c and its full-year dividend fell by the same margin to 99.41c, as the company maintained its 95% payout ratio.
A company must distribute at least three-quarters of its earnings to keep its Reit status.
Net property income improved 2% to R1.14bn, while operating profit, generated from a company’s core operations, decreased 2.6% to R1.01bn. Most of the net property income was generated from the SA office portfolio (38.7%), followed by local retail (36.1%).
IPF expects to deliver low single-digit DIPS growth in its new financial year and a dividend payout ratio of 90%-95%.
Update: May 18 2022
This article has been updated with new information from Investec Property Fund’s CEO.
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