According to [DATA AWA:ARROWHEAD PROPERTIES LTD.], their performance is well above the seven per cent average growth rate of the sector as well as higher than the fund’s forecast of ten per cent distribution growth.
“Our primary focus is growing income for our unit holders. This growth has been achieved by sweating the existing portfolio, containing costs to a level lower than rental growth and deriving income from acquisitions.” said Gerald Leissner, chief executive officer of Arrowhead Properties in a statement.
A total distribution of 113 cents per combined A and B unit represents a 12.36 per cent growth over the 100 cents per unit for the previous year. Their asset base grew from 723 million rand to 3.1 billion rand.
The financial year end has also marked Arrowheads second year as a listed entity and the last as a property loan stock company, the group also converted to a REIT (Real Estate Investment Trust) as of the 1 October 2013.
Arrowhead owns a diverse portfolio of retail, commercial and industrial properties in secondary locations throughout South Africa with a main focus on growing income returns to its investors.
They recently concluded the acquisition of a portfolio of residential properties servicing the affordable housing market to the value of 406 million rand.
Mark Kaplan, chief operating officer of Arrowhead stated that the group were excited about their expansion into the residential market and intend on growing their portfolio by 1 billion rand during the next financial period.
“We are excited about this direction that the fund is taking as have identified the residential market as an opportunity which could offer significant growth and a competitive advantage in a tough market. We are delighted with the support received from our investors and intend to grow the portfolio by R1 billion during the next financial year,” added Kaplan.
Rental levels are also currently at 91 per cent, an increase from 87 per cent from the previous period.
Imraan Suleman, chief executive officer of Arrowhead, explained that the majority of vacancies come from the commercial sector however the group did expect office letting space to remain challenging until the overall economy improves.
“The majority of the vacancies are in the commercial sector where the letting of office space has proved challenging – but this was not unexpected. Whilst there has been a noticeable increase in enquiries for vacant office space, we anticipate only seeing the take up once the economy starts to improve.” explained Suleman.
Nonetheless, he stated that the group remained confident that Arrowhead will continue to deliver above market returns, with expectations of distribution growth to increase between 12 per cent and 14 per cent for the year ahead.
“We are confident that Arrowhead will continue delivering above market returns. Taking into account the prospects for the existing portfolio as well as the effect of new acquisitions, distributions are expected to be between 1.27 rand and 1.29 rand per A and B unit in the 2014 year, an increase of between 12 per cent and 14 per cent over the distribution of 1.13 rand paid in 2013,” concluded Suleman.