JSE-listed real estate investment trust Gemgrow Properties on Wednesday reported a dividend of 26.09c per A share and 19.34c per B share for the three months ended March 31 - 52.18c per A share and 38.52c per B share for the six months ended March 31.
Gemgrow CFO Junaid Limalia explained that the company has about 47-million preferential shares in issue on its protective, first-paid A share listing, and about 405-million B shares in issue.
Gemgrow COO Alon Kirkel commented the company is positioned to deliver on its guidance of 7% to 9% growth on its B share dividend for the year ending September 2018.
Gemgrow owned 139 properties in the reporting period, of which retail comprised 22%, office 33% and industrial 27%. The average gross monthly rental per square meter per sector was R104 for retail, R118 for office and R48 for industrial.
“Gemgrow’s focus is to reshape and improve on the performance of its core portfolio by unlocking further potential from existing properties, effecting strategic disposals, undertaking refurbishments to unlock income on vacant space and upraising yield-enhancing acquisitions,” said Kirkel.
“Bolstering our team of talented professionals and improving operating efficiencies through alternative income and cost containment measures, is a key strategy in ensuring delivery in an environment that has seen subdued growth,” he said.
The value of properties under management increased from R4.5-billion as at September 30, 2017, to R5-billion as at March 31. The revenue stream from the portfolio is now diversified across retail (27%), office (46%) and industrial (27%), with gross leasing area up 10% to 759 964 m2.
Kirkel noted that vacancies increased from 8% to 9% in the reporting period, in line with expectations, as the company executed its strategy to improve its leasing profile.
“Some month-to-month tenants were successfully migrated to longer-term leases. A quarter of the increase in vacancies was attributable to the vacancies relating to acquisitions, secured at no cost to Gemgrow. This and the improved leasing profile represent upside for the company,” he said.
Limalia pointed out that Gemgrow maintains a strong, derisked balance sheet, with a loan to value ratio of 29% and 97% of debt hedged. “We have achieved an improvement in the weighted average debt expiry profile from 12 months at the same time last year to 3.8 years currently.
“We achieved this through the refinancing of existing loans and additional debt funding for acquisitions totalling R550-million, all of which have five-year terms.”
With Gemgrow’s borrowing being 97% hedged, it materially reduces the company’s exposure to interest rate fluctuations in the long term.
Kirkel concluded that government’s planned growth strategy for the South African economy will provide Gemgrow with a platform for accelerated growth in the future as a purely South African focused property income fund.
“Gemgrow continues to explore acquisition opportunities that will deliver sustainable growth for investors.”