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Martprop Property Fund - Martprop reduces cost of funding
Martprop Property Fund
JSE code: MTP
ISIN code: ZAE000037271
Martprop Property Fund has re-negotiated its debt facility with Nedbank, which
has given rise to significantly improved rates as well as access to increased
funding capacity.
Roger Perkin, Martprop MD, advises that with effect from 1 November 2005, the
interest rate on variable rate debt will drop from prime less 1,5% to prime less
2,3%. "This places Martprop in a position where it will enjoy one of the lowest
costs of finance for conventional funding in the listed property sector. Given
the flexibility that this offers over securitised debt, at very similar all-in
costs, we are encouraged by the benefits this will bring to unitholders in terms
of increased distributable income"
The cost of fixed rate funding will be at an all-in margin of 1,3% over the
elected base rate. Martprop currently has no fixed rate debt and will review
this position once the level of borrowings reaches 15% of the Fund"s portfolio
value.
Perkin advises that the facility has also been extended to R750 million, which
can be drawn against to the extent that the legislated limitation of 30% loan to
asset ratio applicable to PUT"s is not breached. "We have approximately R300
million in acquisitions and developments which will come on stream in the first
half of 2006 and the increased facility gives us the ability to continue this
portfolio expansion drive." With total borrowings of around R400 million at
that stage, the savings Martprop will enjoy on the cost of debt will be
meaningful and translate into earnings upside for investors, particularly going
into the 2007 financial year."
10 February 2006
Date: 10/02/2006 05:19:40 PM Produced by the JSE SENS Department
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