Diversified real estate investment trust Arrowhead recorded a solid performance ahead of expectations for the six months ended March 31, despite having to contend with a tough economic environment.
Speaking to Engineering News on May 27, Arrowhead CEO Mark Kaplan highlighted some of the challenges as a shortage of demand for space, margins being under pressure, costs increasing and a limited ability to increase rentals.
Despite this, however, Arrowhead was able to record a 1.5% growth on its core portfolio.
The company reduced vacancies from 7.5% at September 30, 2019, to 7.1% at period end, which Kaplan highlighted as notable in a period when most other players in the market saw increasing vacancies.
The company recorded an overall tenant retention of 88%.
Arrowhead also disposed of 41 assets for R840-million at a 10.3% forward yield and 1.5% discount to book value.
Liquidity was preserved by deferring the decision on an interim dividend.
The reporting period was not impacted by the Covid-19 pandemic. However, looking to the future, Kaplan indicated that the property market could experience fewer rentals in the short term.
During this difficult period, Arrowhead plans to help those tenants that are unable to cover their rent and to collect rent from those that can afford to pay.
Rentals are expected to be impacted until the lockdown ends and the timeframe thereof is uncertain.
However, owing to Arrowhead’s solid performance and the strengthening of its portfolio during the period, coupled with the recent focus on strengthening its balance sheet, means that the company is now well positioned to manage the impact of Covid-19, noted Kaplan.