In­vestors warm to Pol­ish group EPP

Business Day - - Front Page - Alis­tair An­der­son Prop­erty Writer an­der­[email protected]­nesslive.co.za

EPP, the Pol­ish real-es­tate group in which SA-based Re­de­fine Prop­er­ties owns a 39% stake, has ce­mented it­self as one of the stand­out prop­erty in­vest­ments on the JSE so far in 2018.

EPP, the Pol­ish real-es­tate group in which SA-based Re­de­fine Prop­er­ties owns a 39% stake, has ce­mented it­self as one of the stand­out prop­erty in­vest­ments on the JSE so far in 2018.

The firm re­leased strong fi­nan­cial re­sults for the nine months to Septem­ber on Thurs­day, mak­ing it an at­trac­tive in­vest­ment for South Africans in 2018, achiev­ing a to­tal re­turn of 19% while the FTSE/JSE SA Listed Prop­erty in­dex has strug­gled, de­liv­er­ing a to­tal re­turn of -24%.

Some an­a­lysts have said in­vestors are start­ing to warm to EPP as the com­pany has suc­cess­fully set­tled down after teething is­sues in 2016 and 2017. It has man­aged to broaden its in­vestor base dur­ing this pe­riod.

“We like EPP. They are a strong op­er­a­tor in a very strong mar­ket and they have im­proved their as­set man­age­ment this year. Pol­ish growth is sup­ported by fac­tors in Poland it­self as well as its neigh­bour, Ger­many,” Keillen Ndlovu, head of listed prop­erty funds at Stan­lib, said.

THEY ARE A STRONG OP­ER­A­TOR IN A VERY STRONG MAR­KET AND THEY HAVE IM­PROVED THEIR AS­SET MAN­AGE­MENT THIS YEAR

EPP, which has a mar­ket cap­i­tal­i­sa­tion of about R15.2bn, grew its net prop­erty in­come 37% year on year to €102.2m, its re­sults showed. This was as the com­pany, which is in­vested in shop­ping cen­tres and of­fices across Eastern Europe’s largest econ­omy, con­tin­ued to ben­e­fit from strong GDP as well as re­tail sales growth.

EPP is con­tin­u­ing its strat­egy of dis­in­vest­ing from of­fices so it can fo­cus on be­ing the largest owner of re­tail cen­tres in Poland. It has a port­fo­lio of 19 re­tail prop­er­ties, six of­fice build­ings and two devel­op­ment sites in cap­i­tal city War­saw, with one un­der con­struc­tion.

CEO Hadley Dean said he was happy with the com­pany’s per­for­mance so far in 2018 and that earn­ings avail­able for distri­bu­tion per share were 8.75 euro cents, mean­ing the com­pany is on track to meet its stated guid­ance of 11.6c-11.8c per share for the full year to De­cem­ber.

A num­ber of other listed prop­erty funds on the JSE have had to slash their div­i­dend fore­casts due to weak eco­nomic growth. “Op­er­a­tionally the busi­ness con­tin­ues to per­form well, with like-for-like net rental in­come growth for the nine months of 4.2%,” said Dean.

An­chor Stock­bro­kers realestate an­a­lyst Wy­nand Smit said EPP’s re­sults were in line with ex­pec­ta­tions but that the like­for-like rental in­come growth was “es­pe­cially pleas­ing”.

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