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The headline earnings of JSE-listed Tower Property Fund increased to R125-million in the financial year ended May 31, up from the R98.3-million reported the year before.
The company noted that, despite an increasingly difficult trading environment, it “performed well” for the year, with revenue increasing by 30% to R248-million and operating profit by 24% to R201-million on the prior year figures.
Distributable earnings for the period totalled R137-million, with a total distribution of 86.8c a share for the year, just above its prelisting forecast of 86.6c.
During the year under review, Tower Property’s market capitalisation increased by 33% to R1.6-billion and it raised R500-million in an accelerated bookbuild.
Further, it expanded its portfolio to 44 properties and R3.1-billion in value.
Acquistions made during the financial year included the R111-million Medscheme head office property, in Florida Glen; the R51-million multitenant office Whitby Manor, in Midrand; three Shoprite-anchored lower living standard measure (LSM) shopping centres, in Gauteng, valued at R238-million; sections of the Sun Clare Office Block, in Claremont, valued at R193-million; and an industrial portfolio of eight properties in Gauteng and KwaZulu-Natal worth R375-million.
Subsequent to the financial year-end, Tower Property acquired a further four properties, taking its portfolio to 38, with a value of R3.8-billion.
The additional properties were 15 Wellington Road, a recently refurbished mixed-use property in Parktown; Evagold Shopping Centre, a lower LSM shopping centre in Evaton anchored by Cambridge Food; Link Hills Shopping Centre, a convenience shopping mall in the new Waterfall node of KwaZulu-Natal; and an office property in Zagreb, Croatia.
The €23.7-million Zagreb-acquistion, which saw the company acquire 15 floors of the premium-grade VMD Kvart office, marked the fund’s first property in Croatia and increased its offshore exposure to 8%.
Tower Property identified Croatia as a region offering strong growth potential for the group, as the country found itself at opposite ends of the property cycle to South Africa.
“Property prices [in Croatia] are lower than they have been for some time, allowing us to purchase premium-grade investment opportunities at attractive pricing,” the company said in a statement.
The fund would continue to focus on the acquisition of strategic properties and other assets, noting that it had a pipeline of a further R1.5-billion in properties which it was evaluating.
It anticipated a further 6% to 8% growth in earnings for the 2016 financial year, subject to tenancies and market conditions remaining stable.
“The investment strategy is to expand the portfolio by targeting well-located, mainly medium-sized properties with strong cash flows and to ensure a diversified sectoral and geographic portfolio.
“The longer-term objective is for the portfolio to comprise approximately 50% retail space, followed by office, at 30%, and 20% industrial,” the company noted.