Investec Property Fund ups its distribution as SA shows recovery

Investec Property Fund (IPF), which owns a diversified portfolio in SA and Europe, has increased its distribution per share this year by double digits, with its offshore interests once again delivering robust results, while there are signs of recovery at home.

The group’s distribution per share rose 10.8% to 102.23c in its year to endMarch, an R823m payout for a group valued at R9.63bn on the JSE.

This represents a payout ratio of 95%, and operating profit rose 8%, helped by vacancies more than halving in SA and sectoral headwinds for the logistics sector.

IPF is a real estate investment trust (Reit) that owns a diversified portfolio of direct and indirect assets, valued at R22.1bn, in SA and Europe.

The group’s 86 properties in SA account for two-thirds of its portfolio, 41% in retail by value, 37% in office and 22% in industrial properties.

In Europe, it owns logistic assets in major locations, including Germany, France, the Netherlands and Belgium.

Vacancies in SA declined to 4.5% from 11.4% in the previous year, better than expected, with the group reporting continued pressure on office assets, but also “green shoots” as corporates have introduced return-to-work or hybrid policies.

Its SA portfolio was still written down by 2.6% for the year, due to pressure on office assets, but there was a 12.6% valuation uplift in Europe, which benefited from structural trends such as e-commerce, supply chain reconfiguration and urbanisation.

Rental reversions, or a change in rates on review, fell 18% in SA, but grew 3.7% in Europe, and IPF said in April that it is now looking to sell its European portfolio, seeing an opportunity to exit and maximise returns for shareholders.

“We have seen the pan-European logistics platform continue to outperform with structural tailwinds such as e-commerce, supply chain reconfiguration and urbanisation driving strong demand in the logistics sector,” joint CEO Andrew Wooler said in a statement.

“The resulting yield compression has, however, created a favourable environment for an exit,” he said, referring to a rise in property values that compresses the yield from rent.