Real estate investment trust Newpark Reit has revised its full-year funds from operations per share guidance upward despite reporting a decline in that metric at the halfway stage.
The group revised its full-year guidance to 41.5c-48.5c, from a previous range of 39c-46c, citing the impact of the sale of its Crown Mines property at an assumed transfer date of end-November, expected improved revenue at 24 Central and reduced property operating costs,
The group reported a 24.5% decline in its funds from operations per share for the six months ended August, driven by lower rentals at its flagship JSE building in Sandton.
The rental reset, which came into effect in April, weighed on its performance, with gross revenue falling 7.3% year on year to R63.8m, while operating profit before fair-value adjustments dipped 3.2% to R44.5m.
“The rate of leasing vacant office space at 24 Central has been slower than initially projected. However, the reduction in rentals resulting from increased vacancies has been partially mitigated by additional advertising revenues and contractual leasing income of excess parking space,” the group said.
“The weighted average lease expiry across the portfolio stands at a stable 4.9 years, supporting medium-term cash flow predictability,” it said.
The group’s funds from operations per share fell to 26.8c from 35.5c a year ago. It reported headline earnings per share of 21.84c, compared with 21.72c before.
Total profit surges
Despite this, total profit surged 162% to R21.8m, bolstered by fair-value adjustments and reduced funding costs. The group’s loan-to-value increased to 44.5% from 41.7% and its net asset value (NAV) per share slipped 3.8% to R5.62.
The group declared an interim dividend of 26c per share.
In a move to streamline its portfolio, Newpark sold its Crown Mines property for R99.4m in September. The asset, which holds 11,277m² of gross lettable area, was deemed noncore to the group’s strategy. It plans to channel the disposal proceeds towards reducing borrowings.
Dividends are expected to be in line with full-year funds from operations per share, it said.
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