REITS
TRANSCEND PROPERTY FUND
About the fund
Transcend Residential Property Fund Limited was converted to a public company on 22 August 2016 and listed on the Alternate Exchange of the JSE Limited on 1 December 2016 in the Financial Services – Real Estate Investment Trust( Residential REITs) sector.
Transcend focuses on specialised residential property assets and currently holds a portfolio of 13 properties, comprising 2,472 units, located primarily in Gauteng, as well as the Western Cape and Mpumalanga, South Africa. These well-located properties are all stabilised, have track records of consistent and strong rental performance, and are strategic assets that are expected to achieve steady rental income growth and capital growth over time.
Transcend’ s portfolio of residential properties were all completed within the past 6 years and are located within secure estates. These assets differ from conventional inner-city residential rental housing in that they are predominantly 2 and 3 storey walk-up apartments located in desirable and high demand neighbourhoods and are often equipped with lifestyle-enhancing facilities.
Transcend focuses on a defensive asset class, that delivers housing to a heavily underserviced portion of the real estate market with affordable rentals( ranging from R3000 to R7000 per month)
CEO: Rob Wesselo
Rob earned his LLB from the University of Witwatersrand. Rob was appointed CEO of Transcend on 8 July 2016.
He has been responsible for the South African Operations of IHS since 2010. In this role, he has been responsible for overseeing the sourcing of investments, structuring, and negotiating deals with developers and managing the operations of IHS in South Africa.
Before joining IHS, Rob was the Head of Commercial Property Finance at ABSA Business Bank. He has held other positions such as Commercial Director at Pangbourne Properties and Head of Listed Property Funding at RMB.
Results for year ended 31 December 2017
• NAV for the year grew to 10.39 cents per share from the prior year’ s NAV of 9.78 cents per share.
• Cost-to-income ratio of 29.6 %
• LTV of 41.8 %
• 63 investments in real estate projects
• Transcend’ s underlying property appreciated in value, increasing by R29.24 million year-on-year
• Occupancy levels within the portfolio remained robust at 92.72 %, marginally down from 93.1 % in 2016.
• Investment Committee approved the acquisition of three stabilised rental properties. These properties consist of 312 sectional title apartments situated in secure, walk-up complexes, and are located in Gauteng and the Western Cape. The value of the transaction is R136.2 million payable on transfer of the properties, acquired at a consolidated property yield of 9.6 %.
• Dividend growth for 2018 is anticipated at levels between 6 % to 8 %, and excludes any new deals being factored in.
ARROWHEAD PROPERTIES
About the fund
Arrowhead is a Real Estate Investment Trust holding a diverse portfolio of retail, office and industrial properties valued at R5.6 billion, held directly and through a wholly-owned subsidiary.
In addition, as at 31 March 2018, Arrowhead held a 60.1 % interest( 2017: 66.2 %) in its subsidiary, Indluplace Properties Limited, which owns a portfolio of residential properties. As at 31 March 2018 Arrowhead also owned 62.0 %( 2017: 61.7 %) of the B-ordinary shares in Gemgrow Properties Limited, equivalent to 55.5 %( 2017: 55.2 %) of Gemgrow, which owns a diverse portfolio of commercial properties.
In addition, Arrowhead held an interest of 18.6 %( 2017: 19.5 %) in Rebosis Property Fund Limited as well as a 10.6 % interest( 2017: 10.8 %) in Dipula Income Fund Limited at 31 March 2018.
The company’ s main focus is on paying growing income returns to its investors. This is achieved through escalating rentals in terms of leases with tenants, satisfactory renewal of leases with existing tenants, renting of vacant space within the property portfolio, managing and reducing, where possible, costs associated with the property portfolio and by acquiring revenue enhancing properties and investments in other REITS.
SA Real Estate Investor Magazine JUNE / JULY 2018 41