Johannesburg - Altx-listed New Frontier Properties, which lists its primary objective as the acquisition and development of good quality, income generating retail property in the UK, may be forced to rethink its strategy in the future.
The company said that it had been forced to review its thinking of pursuing retail assets in the UK, and would proceed with caution following the Brexit vote that saw the UK voting to leave the EU.
Chief executive Mike Riley said the company had adopted a view of delaying further acquisitions in Britain.
“Consistent with the group’s strategy the company is continuing to pursue dominant retail assets in towns in the UK,” Riley said. “However, following the surprise decision by the UK to vote to leave the EU the new acquisitions have been delayed.”
New Frontier Properties is a UK real estate investment trust (Reit) that is listed on the stock markets of Mauritius and Johannesburg.
On Friday the company presented its financial results for the nine months, reporting a recurring profit of £8.541 million (R163.627m), saying that it would deliver an announcement on a number of asset management initiatives.
It also said it would consider new property acquisitions over the next 12 months, but would do so when appropriate.
Riley said there was a good chance that the company would look for opportunities outside of Britain following the Brexit.
The company said the board of directors had decided to proceed with caution until the uncertainty in the UK economy had reduced and there was more clarity on the state of the property investment market.
Leasing events
The company announced headline earnings of £3.34 per share. The group said it completed 15 leasing events – five of which were long-term core lettings at an average rent increase of 18.96 percent above valuation estimated rental value during the period, with two tenants with a lease expiry or break option vacating its portfolio.
But the group said it continued to have a healthy pipeline of new lettings, with six units under offer for both short- and long-term leases.
It said it would invoke its policy of considering declaring dividends on a six-monthly basis in line with its year-end and half-year, which are August and February, respectively.
The company said it would also offer shareholders the option to receive either a cash dividend or elect to receive a scrip dividend by way of an issue of new New Frontier shares of the same class as the existing shares.
It said it was working with its sponsors and the JSE to provide this option for the August year-end dividend.
The group said the UK economy was forecast to have continuing gross domestic product growth of 1.5 percent for the remainder of 2016 and 2017, rising to 2.5 percent in 2018.
It said the unexpected decision to exit the EU had caused uncertainty, which saw the London real estate market shaking, leaving investors in a tailspin.
Riley said in spite of the developments, the UK economy remained the fifth-largest economy in the world and the second-largest in the EU. The board would, therefore, monitor the Brexit impact on the property market and potential opportunities, which could arise in light of the current strength of the rand.
New Frontier’s shares remained flat on the JSE on Friday at R26.
BUSINESS REPORT