Put Prop fares well through tough conditions
Category Property Fund News
Property investment group Putprop (PPR) on Thursday blamed its drop in net profit before tax to R46.7m from R57m for the year ended June on difficult trading conditions.
Putprop‚ which has investments in industrial‚ retail and commercial properties‚ said the year reflected a continuation of the volatile markets of the previous year‚ with stagnant economic growth in developed economies and reduced growth in most emerging markets.
The company said the political crisis in the Middle East‚ continued to create uncertainty in world markets‚ with wild swings being the norm‚ in all listed share markets‚ locally and internationally.
“All of this was overshadowed by the turmoil in Europe‚ with Greece‚ Spain and Italy placing enormous pressure on the continued successful survival of the single euro currency‚” the company said in a statement.
However‚ Putprop‚ formerly known as Putco Properties‚ said that although the South African listed property sector seemed immune to all of the global influences‚ with the listed property index reporting high growth during the review period‚ operating conditions remained difficult. Vacancies were rising‚ collection times lengthening and there was a deterioration of rental escalations on new leases and renewals.
Putprop said prevailing rentals had come under pressure as had demand for rental space in all of the segments in which it operated.
“Putprop was not immune to the effects of these market conditions‚ we are however fortunate to have a stable portfolio of mainly listed national tenants‚ allowing greater protection against the factors mentioned‚” it said.
The company said that although the year under review presented challenges‚ it managed to produce results that again showed an increase in operating profit before its capital adjustments in respect of property portfolio reevaluations.
It was not all bad news for the company as it managed to increase headline earnings‚ slightly to R21.3m from R19.0m or 74.1c per share from 66.1c previously.
The company declared a cash dividend of 18c per ordinary share in respect of the year ended June from 15c‚ thus bringing the total dividend payable for the year to 33c from 30c.
The company again actively pursued acquisitions during the year in terms of its long-term objective of diversifying its property portfolio further into industrial and commercial properties and reducing the risk of its dependence on its major tenant.
Putprop said it had held renegotiations with Putco‚ its major tenant‚ with respect to the leases expiring in December — 86.1% of the company’s leases expire in 2013.
Indications are‚ that a rental reduction of approximately 11% to 13% would result‚ the company warned.
Author: Warehouse Finder
