Burstone Group, the former Investec Property Fund, says that with the completion of the internalisation of its SA and European businesses it is focused on driving growth initiatives to unlock value-add opportunities.
In its pre-close and voluntary trading update for the interim period ending September 30, Burstone said portfolio optimisation, enhancing the quality of recurring earnings, reducing the cost of occupation, exiting noncore assets and extracting cost savings in the European platform remain its strategic objectives.
Burstone also intends to strengthen its balance sheet, reduce its gearing and continue with capital recycling. Loan-to-value is expected to remain at 42%, and the group sold R1.5bn of assets in the past three years at a 1% discount to book value.
Its all-in weighted average cost of funding has increased from 9% in March to 9.3%.
The group expects distributable income per share to be 4%-5% lower for the half year, with the first half of the 2024 financial year to deliver between 51.09 cps to 51.62 cps.
Burstone is an international real estate business with about R35bn of assets under management and R5bn third-party capital under management.
The company, which listed on the JSE in 2011, owns 79 industrial, retail and office assets in SA valued at R15bn. About 55% of its asset base comprises foreign investments, which include an 83% interest in a pan-European logistics portfolio valued at €1.1bn (about R22bn).
It also entered the Australian market through an 18.7% investment in the Templewater Australia Property Fund and a 50/50 joint venture with Irongate Australia Fund Management.
The SA portfolio is expected to deliver like-for-like base net property income growth of 2% and vacancies at 4%. The office portfolio saw vacancies reduce from 7.4% to 6%.
Its Pan European Logistics Platform (PEL) is expected to deliver strong like-for-like net property income growth of between 7%-8%.
The defensive portfolio’s performance is driven by positive rental reversions and strong leasing activity — with the majority of the space expiring during the period re-let or renewed at about 9% average positive reversions. Portfolio vacancies are at lows of 1%.
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