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Arrowhead delivers higher H1 dividend

24th May 2017

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

     

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JSE-listed residential real estate investment trust Arrowhead on Wednesday declared a dividend of 43.24c a share for the six months ended March 31, 2017 – representing a 6.01% increase year-on-year.

The Reit is “solidly” on track to meet its full-year dividend forecast.

Late last year, Arrowhead had forecast dividend growth of between 6% and 8% a share for the 2017 financial year, compared with the dividend of 82.55c reported in the prior year.

The group, which has cushioned itself to mostly withstand the economic headwinds expected in the next six months, also reported net asset value growth of 23%, to R11.32 a share, for the six months under review, which CEO Mark Kaplan described as a highlight of the first half of the year under review.

Boasting a “defensive and diversified” portfolio, Arrowhead owns some 51 retail, industrial and office properties valued at R5.6-billion with an average value per property of R111-million – more than double the average value of R49-million as at the financial year ended September 2016.

The group holds majority stakes in Indluplace Properties and Gemgrow Properties, allowing indirect ownership of 129 commercial properties and 117 residential properties.

Arrowhead’s investments in Rebosis Property Fund and Dipula Income Fund also emerged as performance enhancers during the half-year under review.

The property group increased its revenue from R743-million in 2016 to R959-million during the six months to March 2017, owing to the conclusion of the Gemgrow transaction and yearly escalations to existing leases.

Arrowhead acquired a 55.2% interest in Gemgrow in October.

Further acquisition opportunities have been limited owing to the volatile current macroeconomic environment.

However, Arrowhead plans to keep its eye on potential acquisitive opportunities, as Kaplan believes there could be an emergence of companies open to consolidation in a difficult trading environment, particularly firms that have not been able to efficiently insulate themselves from the impact of the past six months.

“South Africa has experienced a protracted term of political uncertainty which has negatively impacted economic prospects and gross domestic product growth. Over the course of the last 18 months, we have seen the effects of the higher cost of equity, cost of debt and a deterioration in the general economic sentiment,” he explained.

This resulted in companies struggling to plug vacancy gaps and renew leases, and has heightened competition between property owners for the existing pool of tenants, with a “price war” under way, he concluded.

Edited by Creamer Media Reporter

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