Steady outlook from SA Corporate

Property group SA Corporate Real Estate Fund has increased its full-year distribution by 8.7% to 43.02c per share but the group, which owns a diversified portfolio of industrial, retail, commercial and residential buildings, has given a conservative forecast for its prospects in the year to come.

“In 2016 through proactive asset management interventions and focused operational management, SA Corporate has positioned its property portfolio to generate sustainable and defensive income whilst establishing a pipeline for growth.

“The board’s view of future prospects is that distribution growth of between 6% and 8% for the 2017 year can be anticipated,” the company said.

Bridge Fund Managers chief investment officer Ian Anderson said the results were “more or less” within expectations. “They were a little below what the market was looking for but by a very negligible amount.”

Anderson said the group’s portfolio had delivered a strong performance, especially considering the backdrop of a challenging operating environment.

“Their guidance for next year is disappointing but not unexpected under the circumstances. Companies are battling with an increase in vacancies, which puts pressure on rentals. SA Corp have a strong retention rate which is very positive and the retail portfolio is very active, which should bring growth,” said Anderson.

In the year to end December 2016, SA Corporate reported an 11.1% increase in its like-for-like portfolio value. Net performance income improved by 13.7% compared with the year-earlier period. The company said traditional portfolio tenant retention was at 77.9% with retail positive reversions of 6%.

The value of the group’s independently valued property portfolio increased by R2.6bn to R15bn as at year end.

SA Corporate MD Rory Mackey said he believed the company was able to work as a hands-on asset manager given its mid-cap size.

“We like being a middle capitalisation property fund. We feel we are able to provide market-competitive returns given our current size. We are especially excited about our residential pipeline, which is expanding to include more than the inner city,” he said.

In the past year, SA Corporate has delivered total returns of 25.22%. This puts it behind only Rebosis Property Fund, which has given total returns of 27.20%, and Delta Property Fund, with 27.69%.