12 Sep 2012
Specialist retail listed property company Synergy Income Fund achieved distributions of 44.22 cents per A linked units and 19.53 cents per B linked.
The Johannesburg Stock Exchange (JSE) listed company says distributions are in line with its pre-listing projections and delivered 218 percent growth in its assets for the six-month trading period ended 30 June 2012.
Synergy listed on the JSE on 14 December 2011 with an investment focus on medium-sized community and regional shopping centres in high-growth nodes.
As of 30 June 2012, its property portfolio of 12 properties was valued at R1.71 billion.
Two property acquisitions were completed and transferred to Synergy in August increasing the current market value of assets to R1.736 billion.
Synergy Income Fund chief executive officer William Brooks explains that the strong performance is as a result of significant portfolio growth, the fund’s focused investment strategy, higher portfolio occupancy, increasing rental income and Synergy’s growing ability to attract capital.
The fund’s portfolio favours commuter centres in township areas and rural towns and operates closely with the Spar Group, one of South Africa’s leading retail groups.
Brooks says investors can expect growing performance from Synergy for the year to June 2013.
“We anticipate real growth in distributions for our investors driven by rental escalations, lower vacancies and the benefits of a lower interest rate environment,” he says.
He points out that the fund’s portfolio is well positioned to benefit from structural socio-economic growth in the lower LSM and middle market sector in South Africa.
During the year, Synergy showed a conservative loan-to-value ratio of 36.0 percent at 30 June 2012, with interest rates hedged on 35.0 percent of total borrowings at a weighted average rate of 9.14 percent with a weighted average maturity of 4.2 years.
Synergy’s average cost of borrowings at 30 June 2012 was 8.5 percent.
Its properties include, Sediba Plaza Shopping Centre in Harteesport in the North West, KwaMashu Shopping Centre in KwaZulu-Natal, Ruimsig Boulevard Shopping Centre in Roodepoort Gauteng, Taxi City Shopping Centre in Newcastle KwaZulu-Natal, King Senzangakhona Centre in Ulundi KwaZulu-Natal, Richdens Village Centre in Hillcrest, KwaZulu-Natal, Hubyeni Shopping Centre in Elim, Limpopo, Nzhelele Valley Shopping Centre in Makhado, Limpopo, Van Riesbeeckshof Shopping Centre in Welgedacht in the Western Cape, Highland Mews Shopping Centre in Witbank Mpumalanga, Ermelo Game Shopping Centre in Ermelo, Mpumalanga and Renbro Shopping Centre in Hammanskraal Gauteng.
The two properties transferred to Synergy post 30 June include Setsing Crescent Shopping Centre in Phutaditjhaba in the Free State and Gugulethu Square Shopping Centre in the Western Cape.
Brooks says as of 1 October, the fund will be internally managed and believes direct active management drives performance.
Vacancies across the portfolio were reduced by 21 percent from 5.8 percent at the end of December 2011 to 4.6 percent at the end of June 2012.
Synergy has identified and is evaluating further opportunities to improve its portfolio through redevelopment and refurbishment and several projects have been identified through its relationship with the Spar Group.
Brooks says they will continue to grow the portfolio through value-enhancing acquisitions and developments.
He adds that they will also unlock growth by extracting value from the portfolio, optimising efficiencies in the existing asset base and redevelopment opportunities. –Denise Mhlanga
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