Investec Property Fund expects to deliver on earnings guidance

INVESTECT Property Fund is on track to deliver against its guidance of low single-digit growth in distributable income per share for the six months to September 30, 2022, the group with commercial property in South Africa and Europe said in a pre-close trading statement yesterday.

The resignation of its joint chief executive, Darryl Mayers, effective from November 30, 2022, was also announced.

“This leadership transition comes at a time when the fund’s operating business, portfolio of local and international assets and its balance sheet are in a strong position after the challenges faced by the property sector over the last two years,” the group said in a statement yesterday.

“Darryl’s focus will turn to the pursuit of other business opportunities. He will, however, remain involved with the fund in an advisory capacity with a specific focus on developments, retailer engagement and acquisition activity.”

Andrew Wooler would continue as sole chief executive of the fund from December 1.

In South Africa, the fund owns 86 retail, industrial and office properties, while about 45% of the fund’s balance sheet consists of foreign investments, mainly a 65% interest in a Pan-European logistics portfolio (PEL).

This portfolio consists of 48 logistics properties in the major logistics corridors of seven European countries, including Germany, France, and the Netherlands.

The group said it was targeting a dividend payout ratio of 90% to 95% for the interim period. Loan to value was stable at 38%.

The fund’s performance was driven by a robustly performing South African business that delivered 5% to 6% like-for-like net property income (NPI) growth, while the PEL portfolio captured solid net operating income growth and NPI growth was 3% to 4%.

The balance sheet remained strong. environmental, social and governance strategies were progressing in both regions.

The NPI growth in South Africa was driven by strong performance from the industrial sector and continued recovery in retail. The cost-to-income ratio in the local portfolio was expected to remain around 23% from 23.8% at the end of September 2021.

The PEL portfolio continued to deliver solid performance, supported by positive sector fundamentals. Management was focused on simplifying structure and to unlock value over the next six to 12 months.

The PEL development pipeline would be reassessed.

The group said property fundamentals looked sound in both regions.

The South African portfolio was stable and defensive, while the outlook for the European logistics business remained strong.

There was uncertainty around interest rate risk in Europe going forward. Local and offshore opportunities were being explored to drive growth.