Solid Performance By Arrowhead's Core Property Portfolio in Line With Expectations

Posted On Wednesday, 29 May 2019 14:24 Published by
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Arrowhead Properties Limited, a proudly South African JSE-listed REIT with a diverse portfolio of retail, office and industrial properties today announced an interim dividend of 27,8 cents for the six months ended 31 March 2019, which is in line with the communicated guidance.

 -MARK-KAPLAN

Arrowhead CEO, Mark Kaplan commented, “We continue to position Arrowhead to create long-term sustainable value for shareholders by focusing on direct physical property and, over time, divesting of listed investments that are not part of the Arrowhead group; and by strengthening Arrowhead’s balance sheet by reducing gearing, with a short-term target of bringing group LTV below 35%, without materially impacting earnings”.

During the six months, Arrowhead’s core property portfolio of 49 commercial properties performed well, achieving net income growth of 2,75% before gearing. This performance, in a difficult environment, highlights the sustainable nature of the income generated by Arrowhead’s property portfolio and the benefits of controlling the performance of one’s assets. 

This strategic objective, of owning physical assets directly and simplifying the group structure, will be further enhanced should the proposed merger with Gemgrow go ahead.  Arrowhead is also a long-term holder of Indluplace, which remains a core part of its strategy going forward.

The company intends to reduce, and ultimately, dispose of its holdings in Rebosis and Dipula in the long-term.  Although not a seller at current levels, the impact of the company’s holdings in Dipula and Rebosis is significantly reduced.

Notwithstanding a challenging economic environment, Arrowhead experienced positive letting activity in the period ended 31 March, keeping vacancies within forecast expectations. “Our team worked extremely hard, adopting competitive and creative initiatives, to ensure that vacancies remain at a managed level. We are starting to see an increase in occupancy demand, specifically within our larger retail assets; as a result, our larger retail properties are currently fully let other than churn. The footfall at our centres is stable and not experiencing any major fluctuations. Both office and industrial remain under pressure as conditions in these segments continue to be unfavourable”, said COO Riaz Kader.

As a 100% South African focused fund, the environment in which Arrowhead operates remains very difficult, but the company has seen an uptick in leads post the election and there is cautious optimism that, with strong leadership and increased policy certainty, economic conditions can improve over time. Arrowhead management is confident that it has made the correct, although difficult, strategic decisions, in tough macro-economic circumstances to position the company

for sustainable growth going forward that will create long-term sustainable value for shareholders”, concluded Kaplan.

  • Direct portfolio growth of 2,75%
  • Positive escalations of 2,5%
  • Merger with Gemgrow underway
Last modified on Wednesday, 29 May 2019 14:36
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