Putprop Limited, a property investment company, will pay out a dividend of 7 cents per share (6c) for the year to June 30, bringing the dividend for the year to 11.25 cents (10.25c).
The JSE-listed company is active in all property segments. Its portfolio comprises 13 (2022: 15) properties, mainly in Gauteng, with a gross lettable area of 97 601 square metres, valued at about R1.1 billion.
Chairperson Daniele Torricelli said on Friday that in the year ahead they planned to continue to realign the portfolio into one containing long-term sustainable tenants occupying properties of high value.
This would involve “C” grade properties being disposed of over time and replaced with properties of a higher investment grade with higher contractual rentals from higher calibre tenants.
There would also be a focus on lowering loan to value from the present 41.6% to below 38% by June 2024.
“Looking ahead, we expect little change in current trading conditions until the Reserve Bank commences to reduce the prime lending rate.
“In addition, the national elections in early 2024 need to be factored into the economic climate next year,” he said in the integrated report.
Rentals and recoveries increased to R128.44 million in the past year from R111.33m. Operating profit increased to R77.47m from R67.28m. Net asset value increased to 1 612 cents per share from 1 601 cents.
Some 52% of the portfolio held A grade tenants compared with 37% last year. The retention of tenants whose leases expired during the review period was at 47.3% compared with 100% in 2022.
Torricelli said although the property sector had rallied from the historic lows of the past two years, it still had not fully recovered to pre-Covid levels.
Apart from the higher interest rates and the effect on property companies’ bottom line, the electricity crisis was top of mind for both property owners and tenants.
“The cost to keep properties running during load shedding is onerous. As not all costs are recoverable, returns and dividend distributions are negatively impacted.
“In addition, tenant costs of occupancy have also increased, reducing their ability to absorb rental increases,” he said.
“A positive for Putprop is that we have managed both our vacancy and tenant retention exceptionally well in the past year.
“Tenants, both national and line shops, have all suffered losses of income which flows down to what rentals they are able or prepared to pay in order to remain sustainable,” he said.
BUSINESS REPORT