CAPE TOWN - ARROWHEAD Properties, which is in the throes of merger talks with Fairvest Property Holdings, lifted distributable earnings per B share by 57 percent for the six months to March 31, 2021, in spite of the many weak property market fundamentals that have plagued other real estate investment trusts (Reits).
The board decided to defer the payment of an interim dividend until financial year-end, and no distribution guidance for the full year was given due to the uncertainty surrounding the Covid-19 pandemic.
Arrowhead's share price increased 1.19 percent to R3.39 yesterday afternoon. The share later closed at R3.28 on the JSE. The price had risen sharply from only 93 cents a year ago, but the price remains well below net asset value at the end of the interim period of R6.35 per B share.
Fairvest said two weeks ago it had secured agreements with various Arrowhead B (AHB) shareholders to acquire their Fairvest shares in return for 1.85 AHB shares per Fairvest.
Arrowhead's board said yesterday that it was always open to considering proposals that might unlock value, and it had begun a process to more fully assess Fairvest's proposal.
Fairvest's proposal has, according to reports, won the support of AHB shareholders that include 360NE Asset Management, Vukile Property Fund, Visio Fund Management, Ninety One South Africa, Counterpoint Asset Management, Catalyst Fund Managers and Bridge Fund Managers.
Arrowhead sold 20 assets during the six-month period at a book and sales value of R498 million.
A further 20 properties of R647m were held for sale, the majority of which are expected to transfer during the remainder of the 2021 financial year. Arrowhead holds a diverse portfolio of retail, office and industrial properties valued at R9.3 billion. It holds 60 percent of the residential Reit Indluplace Properties.
In addition, it held 8.6 percent of Dipula Income Fund at March 31, 2021. The last of the group's holding in Rebosis Property Fund was disposed of during the period.
Overall tenant retention and re-letting was at a strong 85 percent. Group loan-to-value was at 39.8 percent.
Rental collections had stabilised to pre-Covid-19 levels, management said. Rental relief had reduced from R77m in the six-month period ending September 30, 2020 to R5m for the six months to March 31, 2021.
The B-share price had increased by 108 percent to R2.70 at March 31, 2021 from R1.30 at September 30, 2020, after paying a full year 2020 dividend per B share of 32.99c in the period.
Arrowhead continues to invest in solar plants at its properties, and 7.3 megawatt (MW) was already installed with a further 3.6MW under construction.
Arrowhead's energy generation stood at 4.7percent of its total energy consumption by the end of March.
Once all 21 of Arrowhead's solar projects were fully operational, its renewable energy portfolio would comprise an installed capacity of some 10MW, generating almost 16 million kW/h per year, a statement said.
Further opportunities have been identified for a fourth and fifth phase of renewable energy roll-outs.
Arrowhead's medium-term ambition was to achieve a sustainable energy generation target of 8 percent, with further alternative energy generation and water resources being explored in order to embed environmentally friendly business operations across its core portfolio.