Dou­ble-digit growth on track

Finweek English Edition - - Companies & Markets -

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

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