PRETORIA – Atlantic Leaf Properties, the listed Mauritius-based real estate company that focuses on commercial property assets in strategically positioned light-industrial and distribution nodes in the UK, anticipates its financial results for the year to February will be slightly better than the previous year.
Paul Leaf-Wright, the chief executive of Atlantic Leaf, said earnings for the third quarter to November were tracking management's expectations and showing an improvement over the prior comparative period.
However, Leaf-Wright admitted the three- and nine-month period under review had been challenging, given the volatility currently being experienced in UK property market because of Brexit, the pressure on the retail property sector, and the generally difficult market to predict, because of other factors such as interest rates and capitalisation rates on properties.
But Leaf-Wright said Atlantic Leaf was well positioned and had a predominant exposure to the industrial market, which comprised 70 percent of the company's assets and was still the best-performing sector in the UK property market.
Leaf-Wright added the retail and office sectors were experiencing pressure from a tenant stability and valuation perspective and although Atlantic Leaf’s portfolio was biased towards the industrial sector, it had been adversely affected by the retail warehousing and office sectors. The company has an exposure by value of 10 percent to the retail warehousing sector and 20 percent to the office sector.
Leaf-Wright said the company had also successfully refinanced a large portion of its long-term debt.
“A conscious decision was made to lengthen the maturity profile,” he said.
Earnings a share for the quarter to November grew by 2.3percent to 2.22p (R3.93) from the 2.12p in the previous corresponding period.
Total rental revenue for the three months to November increased by 11.2 percent to £6.69 million (R118.52m) from £6m. Total assets under management rose by 6.7 percent to £370m.
Leaf-Wright said that while the industrial sector of the UK property market continued to be relatively unaffected by the uncertainty surrounding Brexit, they had adopted a cautious approach to pursuing new investment opportunities, resulting in some “cash drag” on the earnings in the quarter.
He said the company had received new tenant proposals on both its currently vacant Haydock asset and Brecon, which was currently rented at a reduced rate to Homebase due to a company voluntary arrangement.
Should these new leases be successfully concluded, they were expected to create a positive uplift in income and valuations in the 2020 financial year, he said.
The planned redomicile of the company to Jersey and conversion to a UK Reit (real estate investment trust) were planned to coincide with the commencement of its new financial year on March 1.
Leaf-Wright said both the redomicile and conversion to a Reit were subject to final regulatory approvals and an announcement would be made to shareholders once the date had been confirmed.
Shares in Atlantic Leaf Properties closed flat at R16.40 on the JSE on Monday.