Company Data
| Last traded |
R3.29 |
| Change |
R-0.05 |
| % Change |
-1.50% |
| Cumulative volume |
1.15m |
| Market cap |
R6.75bn |
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Johannesburg – Listed property fund SA Corporate Real Estate declared itself able to stem the tenant decline which has hit the rest of the sector.
The property company, which analysts believe has a relatively poor retail portfolio, reported a 7.6% decrease in distributions for the six months to end-June 2010.
Vacancies, a sore point for the group which came under fire for buying a poor quality retail portfolio from Sharemax, decreased from 8% to 6.7%. This was, however, largely due to the sale of a large vacant industrial property.
Retail vacancies remained stable at 8.3%, while office vacancies increased by 6% to 19.4%.
"The quality of their retail is quite poor," said Naeem Tilly of Avior Research. However, he noted the group's focus on refurbishment of properties was paying off. "They're showing they can retain their tenants whose leases are coming up for renewal."
Eighty percent of the group's total industrial expiries will be successfully retained for 2010, the fund said.
SA Corporate's portfolio includes small retail centres like Coachman's Crossing in Johannesburg, Davenport Square Shopping Centre in Durban, and St Georges Square in Knysna. Its industrial portfolio includes quality units near Durban harbour.
"A lot of our vacancies are building specific," said MD Len van Niekerk. "A majority of the retail vacancies were attributed to the Northpark Mall." The group's refurbishment of this mall will result in lower vacancies, Van Niekerk said.
According to Tilly, the group can offer investors a pleasing turnaround story. The share is cheap compared to its peers and its forward yield is 9.9%, compared to the sector average of about 8.8%.
"It offers a nice yield advantage, but you have to price in the risk of the poor quality of its retail portfolio," he said.
"Their results were in line with our expectations," said Macquarie First South property analyst Leon Allison. "The share offers a high yield, but I wouldn't go as far as calling it a bargain."
According to Allison, stocks are fairly priced. The share was trading at R3.09 at 15:00 on Friday.
The group declared a distribution of 14.24 cents per unit.
The group said it expects positive growth for the full-year ended December. "Generally the tone is more positive, even though conditions remain tough," said Van Niekerk.
- Fin24.com