INVESTEC Property Fund (IPF) is exploring the sale of its pan-European logistics (PEL) portfolio, which amounts to almost half its balance sheet value, to unlock maximum value for shareholders, the group said yesterday.
Joint CEO Andrew Wooler said they previously indicated an intention to introduce third-party capital into the PEL platform, and since then significant unsolicited interest in the PEL had been received.
“As a result, earlier this year the board, with the PEL platform co-investors, considered it appropriate to undertake a formal sale process. The process is in the very early stages,” he said.
Joint CEO Darryl Mayers said the aim was to benefit shareholders - prices for logistics assets were high worldwide and there was “a wall of capital chasing these assets”.
“We have seen the PEL platform continue to outperform with structural tailwinds such as e-commerce, supply chain reconfiguration and urbanisation driving strong demand in the logistics sector. The resulting yield compression, however, has created a favourable environment for an exit. This process does not impact IPF’s focus on geographic diversification, but rather offers the Fund an opportunity to realise value for shareholders,” said Wooler.
Mayers said in a telephone interview that the aim was to derive the maximum value for shareholders - prices for logistics assets were high worldwide.
IPF has an industrial, office and retail portfolio in South Africa valued at about R15.2 billion, while it has a 65 percent stake in a PEL portfolio of 48 logistics properties in seven European countries. The PEL portfolio makes up about 44 percent of IPF’s portfolio value.
IPF’s distributable income per share grew by 10.8 percent to 107.60945 cents after a strong performance by its local portfolio and in PEL. The results recovered from the Covid-induced decline in 2021 and demonstrated resilience in the face of ongoing uncertainty in the global economy, said Mayers.
The second half dividend of 52.45879c per share, paid out at a ratio of 95 percent of distributable income, represented 10 percent growth year-on-year.
Net asset value improved 1.9 percent to R16.96 per share driven by a 12.6 percent upward revaluation of PEL, with the SA valuation stabilising.
Some R1bn of properties had been identified for sale with R530 million sold or in process of transfer.
Management projected low to mid-single-digit distributable income growth per share in the 2023 financial year.
Vacancies reduced substantially in the South Africa portfolio to 4.5 percent from 11.4 percent. Mayers said this was mainly due to the success of their teams on the ground.
Vacancies in the PEL platform also reduced to 2.3 percent from 4.3 percent.
Mayers said office vacancies were a challenge, with pressure on rentals due to structural oversupply, but their teams did well with vacancies at around 9 percent, one of the lowest in the sector.
He did not anticipate a significant improvement in the oversupply of offices in South Africa in the short term.
Loan to value reduced to 38.2 percent from 40.5 percent.
In the year ahead, growth in the retail portfolio and a recovery in the industrial sector would likely be offset by a suppressed office sector.
Robust growth was expected from the retail sector of the portfolio, following refurbishments at Design Quarter and Balfour Mall due to come on stream in the 2023 financial year.
In Europe, the focus was on maintaining solid performance and creating optimal value for shareholders.