Development-focused property investment fund Pivotal Fund has reported solid results for the six months ended August 31, with net asset value a share having increased 17.35% year-on-year to R23, excluding deferred tax.
 
“The results emphasise our strategic objective of generating sustainable total returns from our portfolio of investments through capital growth, unlocking development margin on quality developments and growth from our offshore investments,” CEO Jackie van Niekerk commented in a statement issued on Monday. 
 
Pivotal currently has borrowings of R7.4-billion, which represents gearing of 51.3% of the current property portfolio value.

At August 31, the average cost of funding decreased to 9.4%, from 9.6% at February 29. Interest rates have been fixed in respect of 81% of borrowings for an average period of 3.5 years.
 
Pivotal reiterated that, despite its positive interim performance, it faces a number of external challenges including a stagnant domestic economy and an uncertain political landscape. And although its completed portfolio is expected to continue to perform satisfactorily, development activity is expected to remain constrained, affecting development returns in the short to medium term.

The company, therefore, believes that the proposed buyout of Pivotal by Redefine Properties will benefit its shareholders. Pivotal shareholders will have the opportunity to convert to a real estate investment trust (Reit) structure and receive Redefine and Echo Polska Properties (EPP) shares, benefiting shareholders through bi-yearly income distributions, exposure to foreign currency earnings, enhanced liquidity, as well as continued exposure to Pivotal’s existing portfolio of A-grade properties.

Pivotal and Redefine in August announced the proposed deal, with Pivotal shareholders to receive 138.54 Redefine shares and 9.38 EPP shares for every 100 Pivotal shares held prior to the implementation of the agreement.