Property firm Investec Property Fund (IPF) has posted a 10.8% increase in distributable income per share (DIPS) of 107.6c for the financial year ended March 31, compared with DIPS of 97.08c in the prior financial year.
The company declared a final dividend of 52.46c apiece, adding up to the total dividend for the year of 102.23c apiece, also up 10.8% year-on-year.
IPF says the results reflect a recovery from the Covid-19-induced decline experienced in the 2021 financial year, and resilience amid ongoing uncertainty in the global economy.
In South Africa, like-for-like net property income grew by 9.6% year-on-year to R1.1-billion, driven by strong leasing activity, with the vacancy rate reducing significantly from 11.4% at the end of March 2021 to 4.5% by the end of March 2022.
The officer sector, however, remains a challenge, with pressure on rentals owing to structural oversupply in the market. IPF’s office vacancy rate sits at 9%.
In Europe, the firm’s PEL platform remains supported by sector tailwinds and delivered like-for-like net property income growth of 3% in the year under review, driven by positive rental reversions of almost 4% and strong letting activity that reduced overall vacancy to below 2%.
Strong letting activity, coupled with strong sector fundamentals in the region, resulted in a 12.6% upward valuation to the portfolio.
IPF has, however, decided to sell the platform, and the process is currently at an early stage. The company received significant unsolicited inbound interest in respect of PEL and, together with co-investors, considered it best to undertake a formal sale process.
Co-CEO Andrew Wooler explains that the company has seen the PEL platform outperform with structural tailwinds such as e-commerce, supply chain reconfiguration and urbanisation driving strong demand in the logistics sector. The resulting yield compression, however, has created a favourable environment for an exit. He adds that the sale offers IPF an opportunity to maximise and realise value for shareholders.
Despite an improvement in its loan-to-value ratio from 40.5% at the end of the prior financial year to 38.2% in the reporting year, Investec Property remains out of range with its targeted loan-to-value (LTV) ratio of between 30% and 35%.
The company expects a South African asset disposal pipeline worth R530-million having been sold or awaiting transfer will reduce the LTV to about 37%.
The company expects to deliver more DIPS growth in the 2023 financial year, albeit at a low to mid single-digit rate.
Meanwhile, IPF has announced the resignation of its CFO Zaida Adams to pursue personal matters, effective July 1.
A prior CFO of the firm, Jenna Sprenger, has been appointed interim CFO while a recruitment process for a permanent appointee is under way.