| Tue 6 Dec 2005, 13:14 | | Paraprop - Company Press Release |
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Paraprop - Company Press Release
Paramount Property Fund Limited
(Incorporated in the Republic of South Africa)
(Registration number 1945/019928/06)
Share code: PRA
ISIN: ZAE000028577
("Paraprop")
PARAMOUNT PROPERTY FUND DELIVERS GROWTH:
Tuesday, 6th December 2005
ANNUAL HIGHLIGHTS
- Distributions of 54,5c, representing a 6,9% increase
- Total return of 50%, comprising 37% capital appreciation and 13% income
- Portfolio valued at R2,12-billion
- Borrowings reduced to 52,2%
- Market cap - as at end December 2005 - will exceed R1,1-billion
- Earnings growth for the year ahead anticipated at 8%
JSE-listed Paramount Property Fund (Paraprop) has declared a fourth and final
distribution of 15,5 cents, bringing the Fund"s total distribution over the past
12 months to 54,5 cents (2004:51 cents). This translates into a 6,9% increase
which is higher than anticipated. The distributions consist of 3 quarterly
payments of 13 cents each with a final "top up" payment of 15,5 cents.
The size of the portfolio has grown dramatically to R2, 12-billion, doubling in
size from the previous year. Paraprop recently announced the acquisition of
R839,5-million of new properties, most of which will be transferred into the
fund by end-December. This will push the fund"s market capitalisation to over
R1-bilion, a major milestone which positions it as a "mid-cap" fund, and
increases its appeal to larger investors. The acquisitions were a good balance
of retail, office and industrial in South Africa"s 3 major metro areas.
Paraprop"s debt ratio reduced to almost 50% during the year and MD of Paraprop,
Rodney Squire-Howe says "it is our intention to maintain the ratio at around
50%."
"We continued with our approach of active asset management, and 19 properties
with a total book value of R146, 88-million were sold. These achieved good
prices, resulting in a substantial profit for the fund. The sales, mainly small
industrial and office properties in Gauteng, served to consolidate our portfolio
and reinforce the quality of our asset base. A total of 14 properties with a
total value of R1-021-billion were acquired during the year under review and
included blue-chip properties, properties where we identified we can add value,
and solid cash-flow streams.
Refurbishment activity was undertaken at seven of our properties, in order to
maintain or enhance their income-earning capacity. Two new developments were
successfully completed, being the Mr Price Home Store in Tyger Valley, and the
"34 St Georges" project which entailed the conversion of an office block in the
Cape Town CBD to apartments, and we have a further three major redevelopment
projects on the drawing boards at existing properties"
Squire-Howe noted that the property portfolio performed well over the period,
showing attractive growth in net rental income.
"This growth in income comes after several years of negative or static growth
and shows a significant improvement in the fundamentals of the underlying
property rental market. The positive market, combined with our hands-on
property management approach, saw vacancies reduced to 2, 5% at year end."
Commenting on the year ahead, he added that the outlook for the property market
for 2006 was good.
"Low interest rates, strong consumer demand, and high levels of business
confidence are causing the economy to grow at an increasing pace. This growth
requires increasing amounts of commercial space, which is currently led by the
retail and industrial sectors, with the office sector rapidly catching up.
Barring unforeseen changes, the industry can therefore look forward to further
decreasing vacancies, increasing rentals and a spate of new developments. We
anticipate that this will be reflected in Paraprop"s portfolio where we expect
to see the trend of growth in rental income continuing in the year ahead."
ends
Contact: Rodney Squire-Howe, Managing Director, Paramount Property Fund
(021) 659-5945; 083-251-9537
Bruce Kerswill, Executive Director; (021) 685-4020; 083-409-7050
Issued by: Nicola Nel; Atmosphere PR: 461-2117; 082-459-228
Date: 06/12/2005 01:14:48 PM Produced by the JSE SENS Department
