Investec Property Fund closer to offshore target

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JOHANNESBURG – Listed Investec Property Fund (IPF) has moved closer to its strategic target of generating 20percent of its income from offshore assets following its R1.1billion investment into a Pan-European logistics portfolio earlier this month.

The IPF said yesterday its balance sheet now comprised 11.7percent offshore exposure in developed markets following this investment, which also provided the fund with geographic diversification and exposure to quality real estate in developed markets.

The fund, through wholly-owned subsidiary Investec Property Fund Offshore Investments, acquired a 42.9percent interest in a portfolio of 22 logistics properties located across Europe with an asset value of 432m (R6.34bn) post its financial year to March this year.

Nick Riley, the chief executive of the IPF, said yesterday that the initial portfolio was located across Germany, France, Netherlands, Spain, Italy and Poland.

Riley said the IPF would be investing alongside funds and other segregated mandates managed by Ares Management, a publicly traded, leading global alternative asset manager with about $106bn (R1.3trillion) in assets under management.

“The investment not only forms a part of our strategic intent of enhancing our offshore exposure, but also brings the first Pan-European logistics property offering to South African investors.

“The European logistics sector has attractive growth prospects, benefiting from the significant growth in trade as well as the region being less advanced in relation to the future of online than in the UK and US,” he said.

The IPF yesterday reported an 8.5 percent growth in dividends a share to 138.53cents in the year to March from 127.65c in the previous year.

Excluding an antecedent interim dividend from Investec Australia Property Fund, the year-on-year dividend a share growth was 6.1percent.


Riley said despite an extremely challenging operating environment, the base property portfolio delivered net property income growth of 5.7percent.

He said all three sectors delivered positive like-for-like net property income growth, with retail the strongest performing sector at 7.8percent growth.

“Our strategy of investing in quality assets, with strong property fundamentals remains core to our business, especially as the upswing in sentiment that we have seen in South Africa since December is likely to take some time to filter through to the property market. As a result, we expect the challenging sector dynamics to continue for the short to medium-term,” he said.

THe IPF owns an investment portfolio of direct and indirect investments in South Africa, Australia, the UK and Europe. Its direct portfolio comprises 105 properties in South Africa, with a total gross lettable area of 1.24million square metres valued at R17.6bn.

Vacancies increased to 4.8percent from 1.4percent, driven largely by its industrial portfolio.

The IPF said its office vacancy rate of 5.4percent and retail at 3.3percent remained well below industry averages.

Riley said Edcon was “once again” in a process to restructure its business and had approached the IPF about store portfolio rationalisation, which may include store closures.

He said the IPF had 23 Edcon brands located across 10 retail properties, making 1.9percent of the total retail portfolio.

Riley said no agreements had been reached yet, but the fund did not expect the outcome to have a significant impact on revenue.

The IPF expects growth in core dividend a share of between 6.5 and 7.5percent for its financial year to March 2019.

Shares in the IPF dropped 0.34percent on the JSE yesterday to close at R17.59.