South Africa-focused real estate investment trust (Reit) Liberty Two Degrees (L2D) on Monday posted a distribution of 59.22c a unit in its maiden full-year results.
Its net asset value per unit grew to R9.86, while it also managed to decrease its arrears to 4.6%, despite challenging trading conditions.
The positive performance was a result of good leasing progress, said L2D CEO Amelia Beattie.
L2D began trading as a Reit on the JSE on December 6, 2016. It manages an R8.71-billion portfolio of predominantly retail-focused assets. During the financial year under review, its portfolio grew by R2.65-billion as a result of the conclusion of a July 1, 2017, acquisition of a further 9% of the Liberty Property Portfolio for R2.5-billion.
The company has also made significant commitment to transformation with 65% black representation, of which 53% of that is black female representation.
“Our first year since listing was marked by numerous operational accomplishments, as well as some headwinds, which included a challenging macroeconomic and political environment, the impact of the put option exercised by Liberty, the closure of Stuttafords and Eastgate Shopping Centre’s municipal valuation increase, all of which had an impact on our distribution,” she said.
Following the decision by Liberty Group to exercise the put option in June 2017, L2D’s shareholding in the co-owned Liberty Property Portfolio increased from 22% to 31%.
L2D also managed to use its active asset management measures in which it managed to allocate Stuttafords’ space to other tenants, with those spaces now mostly let. “This offered a variety of high-quality brands to our customers when the new stores open in due course,” noted Beattie.
L2D’s total retail vacancies as at December 31, were 4.3%, which included the Stuttafords vacancy of 3.1%.
With office vacancies at 10.3%, L2D’s overall vacancy rate is 6.4%.
L2D FD José Snyders said the company’s balance sheet is well positioned to take on gearing. “It is management’s strategic intent to use the capacity to fund future quality acquisitions in line with our strategy.”
Beattie said that despite the challenges impacting the business in 2017, L2D was on track to deliver net property income growth of between 7% and 9% this year, supported by the emergence of an improved trading environment in the second half of 2017. “Our robust property portfolio is well positioned to show continued improvement.”