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Arrowhead portfolio expands

Arrowhead Properties has grown rapidly over the past five years, while maintaining strong distribution growth.
Arrowhead portfolio expands
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The South African-focused JSE-listed real estate investment trust (Reit) declared a dividend of 82.55c per share for the year ended September 30, results on Wednesday, 16 November, showed. This represented growth of 9.85% compared with the previous year.

Arrowhead, which listed in 2011 with R1.4bn worth of properties, now has an investment portfolio valued at R11.5bn, which is made up of R1.5bn worth of investments in other Reits and R10bn in direct property.

Its core property portfolio grew 6.1% during the period.

At the end of September, Arrowhead's shareholding in Indluplace Properties was 60.1% and it owned 11.5% of Dipula Income Fund and 19% of Rebosis Property Fund.

"Arrowhead is well diversified with properties across the country and sectors, including residential. It is a defensive investment especially in this challenging environment," said chief operating officer Mark Kaplan.

As at the end of September, Arrowhead owned 154 buildings of which 47% were retail properties, 41% offices and 12% industrial by value.

Vacancies increased marginally from 7.3% at the end of September 2015 to 7.8% at the end of September 2016.

"Despite the tough macroeconomic environment currently, we continued to achieve average rental escalations of 8.11%, on lease renewals across the property portfolio. Our balance sheet is well positioned to weather the challenging environment," said chief financial officer Imraan Suleman.

Post the reporting period, on 25 October, Arrowhead disposed of its subsidiary Cumulative Properties to Gemgrow Properties for R1.89bn. Upon conclusion of this transaction, Arrowhead would own 54 properties valued at R5.7bn with a vacancy level of less than 6%.

Evan Robins of Old Mutual Investment Group said the anticipated dividend growth of 6%-8% for the 2017 financial year was pleasing.

"Arrowhead results were robust with 6% growth in their core portfolio and they have provided decent forward guidance considering some of the headwinds they face ... including Sasol departing their Rosebank office."

Source: Business Day



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