Double-digit growth on track
WHAT THIS PRETORIA CBD-focused property company lacks in bulk and liquidity it more than makes up for in performance. The counter – one of the smaller players of the listed property sector, with a market cap of R1,8bn – continues to impress with its ability to grow income payouts way above the sector average.
Management recently announced a better than expected 16,8% growth in distributions for the year to end-February 2010, against a sector average of around 8%, which places it as one of the sector’s top three performers in terms of income growth – for the sixth year running.
A key contributor to ongoing doubledigit distribution growth is management’s strategy to focus heavily on the affordable housing market in the inner cities of Pretoria and Johannesburg. Premium is the JSE’s only real estate counter with a meaningful exposure to residential property. Its housing portfolio comprises more than 3 000 rental units, mainly spread between the inner cities of Pretoria and Johannesburg. The company also owns 694 residential units in a newly completed, mixed-use development in Hatfield. Construction on the second phase of the Hatfield project is under way, comprising a four-level car park, 9 000sq m of offices, a hotel and some retail space.
Management says ongoing investments in upgrades and redevelopment of existing office and retail buildings – many being located in Pretoria’s CBD – will continue to impact positively on distribution growth for its 2011 financial year.
Admittedly, Premium’s relatively high vacancy of 21,7% (17,8%) may well be cause for concern. But it offers upside, as there’s potential for the empty space to be taken up on the back of SA’s economic recovery. Also, a large percentage of its vacancies pertain to properties undergoing