IAPF puts dual Australia listing on hold

THE INVESTEC Australia Property Fund (IAPF), the first inward-listed Australian real estate investment trust (Reit) listed on the main board of the JSE, has placed its potential dual listing on the Australian Securities Exchange (ASX) on hold for now.

IAPF management said in November that it was considering a dual listing, subject to favourable market conditions.

IAPF chief executive Graeme Katz said yesterday that since November there had been a shift in the price of global bonds and a corresponding weakness in the Australian Reit market. “As a result, market conditions have not been conducive to a listing as yet.”

However, Katz said the IAPF would continue to explore the possibility of an ASX listing and work on preparing the fund for listing in Australia when market conditions permitted.

Katz said the ASX listing was a natural evolution for the fund as it looked to grow and access alternative sources of capital.

“A listing on the ASX has the potential for the IAPF to rerate and will put the fund in a unique position to access capital from two mature property markets,” he said.

The IAPF yesterday declared a final distribution a unit of 5.08 cents pre-withholding tax in the six months to March, to boost the total distribution for the year to 10.03c. This represented a growth for the full year of 3 percent.

Katz said the performance of the fund resulted from the continued implementation of the strategy to seek out and create value for unit holders, whether in the context of exploring new markets such as New Zealand, making acquisitions that represented relative value compared to other available opportunities or by improving the quality of the underlying portfolio through active asset management. He said these efforts had contributed to an increase in the IAPF’s net asset value of 11.1 percent in the year to March, which was supported by a valuation uplift of A$73.2 million (R677.76m) in the same period.

Katz said the IAPF’s management has also been focused on improving the weighted average lease expiry of the portfolio, which had been achieved through strategic acquisitions of properties with long dated lease expiries and an increased focus on tenant engagement.

The fund acquired three properties in the year, including its first property in New Zealand in December, the Majestic Centre office building in the heart of the Wellington central business district.

The other properties acquired were two Melbourne industrial properties, both of which provide long-term sustainable revenue for the fund with lease expiries in excess of seven years.

The IAPF’s portfolio has grown 7.7 times since listing in October 2013 and now comprises 27 properties with a total gross lettable area of 285 146m² and valued at more than A$1 billion.

The fund had a weighted average lease expiry of 5.2 percent by revenue at end-March, with 44.4 percent of leases expiring after five years.

Vacancies improved by 3.9 percent in the year and the fund had a 98.5 percent occupancy rate by revenue compared with 94.6 percent at the end of March.

The IAPF expected distribution growth of between 2 and 2.5 percent pre-withholding tax in the new financial year.

IAPF shares rose 1.09 percent on the JSE yesterday to close at R11.14.