Roy Cokayne
A REDUCTION in costs resulting from energy savings by listed Tower Property Fund was largely responsible for significant increases in the fund’s operating profit in the six months to November.
Revenue increased by 38 percent to R118 million and operating profit by 37 percent to R96m compared to the previous corresponding period.
Distributable earnings grew by 59 percent to R63m and the interim dividend increased by 27 percent to 42c a share.
Tower chief executive Marc Edwards said on Friday that the fund’s operating costs were down 13 percent net of recoveries following good results from its lighting retrofit programmes and the solar energy project at its flagship Cape Quarter property.
Edwards said the savings from the greening programme had exceeded expectations, with R850 000 being saved annually at Cape Quarter through the lighting changes while electricity demand had been reduced by 13 percent.
“We expected annual savings of R750 000 at the Cape Quarter from the lighting retrofit programme. We have achieved total savings of R1 million at Cape Quarter. The solar initiative will save more than R350 000 a year and accounts for 5 percent of the building’s demand,” he said.
Edwards added that savings at the De Ville Shopping Centre were also on track to beat their expectation and total about R300 000 a year. He said they were looking at extending the greening programme to other major properties.
Vacancies increased to 10 percent in the reporting period largely because of two large tenants in the Clearview Motor Village in Roodepoort absconding from their lease obligations. Edwards said both these tenants were motor dealerships but declined to identify them because legal action was currently being taken to recover the debt.
He said vacancies had subsequently been reduced to 7 percent because of new letting deals finalised and new acquisitions.
Tower has identified a significant development opportunity through the group’s development arm at Cape Quarter.
Tower acquired two properties, the final phase of the Constantia View Office Park in Randburg and the Medscheme building in Florida North, in the past six months for a total of R122m.
It now has a portfolio of 32 commercial, industrial and retail properties valued at R2.2bn.
Edwards said they expected the value of the fund’s portfolio to be at R3.5 billion by end of May and at R5bn by end of May next year. He expressed confidence Tower would meet its distribution forecast of 86.6c for its financial year to May.
Shares in Tower declined 3 percent on Friday to close at R9.40.