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Pivotal Property Fund makes more acquisitions

The fund reports its maiden results since its JSE listing.

After joining the ranks of JSE-listed property companies in December, Pivotal Property Fund (Pivotal) continues to make more acquisitions as part of its growth strategy.

Pivotal – with a market capitalisation of R7.3 billion, in its annual maiden results for the year ended February 28 – acquired properties to the value of R6.4 billion. This brings its total property portfolio valued at R9.3 billion.

The acquisitions increased the number of Pivotal’s properties to 40 from 33 making up of retail and office properties, strategic land holdings in areas close to Gautrain stations in Pretoria and Johannesburg.

Pivotal – which was assembled by developer Abland in 2005 – is currently undertaking developments and a further pipeline of 445 000 square metres with an estimated value of R5.7 billion upon completion.

Pivotal is a capital growth and development company, and not a real estate investment trust (REIT). Thus, Pivotal does not pay any dividends as its income stream is reinvested into its development pipeline.

Pivotal has acquired the balance of shares in co-owned properties and other properties to the value of R3.5 billion. This includes income-producing properties valued at R2.9 billion such as the Goldfields Mall in Welkom and Lakeview Office Park in Constantia Kloof.  

It also announced a R600 million current and future development pipeline which includes the remaining 80% of its 72 000 square metre flagship asset Alice Lane development near Sandton City. The three-phase mixed-use development is set to be fully completed in 2017 and has already secured tenants including Virgin Active, Standard Bank, Bowman Gilfillan, Sanlam and Santam.

Other acquisitions include an 80% share of the Kyalami Corner shopping centre development in Johannesburg. The 28 000 square metre retail development will be anchored by Woolworths, Checkers, Pick n Pay and Virgin Active. Pivotal has also acquired a 50% share in the property adjacent to the Loftus Versfeld stadium in Pretoria. It will be developed into a 55 000 square metre mixed-use precinct.

Furthermore, it acquired a 33.3% share in the Hertford Office Park, located near Mall of Africa located between Midrand and Sandton. It has other refurbishments to its office and retail properties.  

Vacancies across its portfolio decreased from 2.1% to 1.8%, with Pivotal’s retail portfolio showing a vacancy rate of 2.9% and 1% for its office assets.

In line with property counters looking for growth avenues in African markets, Pivotal has followed suit. It has entered into a memorandum of understanding to acquire a 37.1% shareholding in a development in Lagos, Nigeria valued at $104 million (R1.2 billion).

Borrowings

For the period under review, it reported a growth in net asset value per share of 25.3% to R18.40 from R14.69. Development funds usually have more borrowings on their balance sheet. In Pivotal’s case, its borrowings amount to R4.7 billion, this represents 47% of the property portfolio by value. Pivotal reduced its weighted average cost of debt from 10.2% to 9.4% and about 87% of borrowings have been fixed for an average period of five years.

CEO of Pivotal Jackie van Niekerk says property development by its nature is a long-term play and “growth in respect of specific years can vary to an extent”. “Our focus is on long-term value creation through the successful completion of existing developments,” she says.

The company also plans to diversify its investment portfolio by investing in selected international markets.

Pivotal shares were up 0.37% to R24.49 at 13:00.

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