CAPE TOWN - Tower Property Fund’s distribution per share fell 40 percent to 44.5 cents for the year ended May after lockdowns in South Africa and Croatia in April and May created challenges, reduced growth and added to the pressures facing tenants.
Cash reserves were strong pre-lockdown, assisting the group to manage the turbulent period, it reported on Friday. Tower has a portfolio of 42 convenience retail, office and industrial properties worth R4.8 billion in South Africa and Croatia.
Revenue fell 16.1 percent to R395.6 million as a result of R55.1m arising from the sale of the Napier Street residential units the prior year, and lower rental income from the sale of non-core properties in the year.
This was partially offset by the Yazaki Block B acquisition in Croatia and the weakening of the rand. Net property income fell by 3.5 percent from the prior year to R361.2m, due to the sale of properties and the impact of Covid-19 related lockdowns.
Relief offered to the most vulnerable tenants through the pandemic, including hairdressers, gyms, restaurants and coffee shops, typically involved rental deferrals typically repayable over six to twelve months.
To date, Tower had offered R6.2m in concessions and R5.2m in deferrals. The portfolio vacancy was at 7.9 percent. The dividend pay-out ratio had been reduced to 75 percent. Loan to value was at 39.1 percent. Investment property valuations fell by R429m during the year. Tangible net asset value fell 16 percent to R7.62 per share. The share closed at R2.90 on the JSE on Friday.
Other items that impacted negatively on Tower’s distributable income included increased interest on debt incurred to fund capital expenditure, debt cancellation fees on certain refinanced facilities and the sale of assets at yields higher than the cost of debt. A decision, in the current environment, to no longer add back and distribute rental income lost on developments, meant total dividends reduced by 40 percent to 44.5 cents per share.
Areas of good growth were expected in the new financial year, most especially in Croatia. Cape Quarter and Old Cape Quarter would remain a short term focus as the development was finalised, residential units were disposed of and vacant space was let up.
BUSINESS REPORT