JSE-listed Tower Properties has revised its guidance for distributions for the financial year to May 31 to exclude one-off earnings, which it believes should be redeployed by the company to grow distributable income rather than be distributed to shareholders.
The company had previously expected to grow its distributions by 6% year-on-year to 97.5c a share for the current financial year, of which 81.5c comprised core earnings and 16c one-off earnings.
The anticipated one-off earnings were to be realised through R240-million in profits from the sale of newly built residential apartments at Napier street, which is part of the Cape Quarter precinct, in Cape Town. These units will be completed in November.
Tower also plans to sell seven noncore properties, which is expected to generate aggregate sales proceeds of more than R450-million, which will be used to reduce gearing and rebuy Tower shares.
The property company expects its core earnings for the current financial year to increase by 8% to 10% year-on-year and has, therefore, revised its guidance for distributions for the year to between 80c and 82c a share, excluding one-off earnings.
On a rolled, 12-month forward basis, the company expects to report a distribution of between 84c and 86c a share.
Further, subject to obtaining regulatory approvals, Tower is considering spinning off its Croatian properties into a new vehicle focused on European properties.
Tower will retain control over the assets by holding a majority equity stake.
Tower is in the process of refinancing its European debt which will reduce interest expense in the company, as well as reduce the amount of capital required for the repayment of bank loans.