Investec has sold 757 Ann Street in Brisbane's Fortitude Valley. Photo: Supplied

Investec fund beats guidance after local listing

Nick Lenaghan|May 13, 2020

The Investec Australia Property Fund has exceeded its earnings guidance in its first full-year result since dual-listing on the Australian Securities Exchange a year ago.

Even so, the South African-backed fund will stick to its forecast distribution as a measure of prudence during the coronavirus-caused downturn, according to chief executive Graeme Katz.

“We have determined to distribute the amount previously advised to themarket, which we believe demonstrates prudent cash management,” he said.

“The portfolio is focused on metropolitan office and industrial properties, which we believe will be relatively resilient given the current market uncertainties.”

Already trading on South Africa’s Johannesburg exchange, the property trust dual-listed on the Australian Securities Exchange in May last year after its portfolio of local office and industrial passed $1 billion in value.

Mr Katz said most of the fund’s tenants were government, listed or multinationals. The portfolio had limited exposure to tenants in the retail and consumer discretionary sectors.

“There is no doubt that some tenants have been financially impacted by the COVID-19 pandemic,” he said.

“We are assessing requests for rental support on a case-by-case basis with a view to agreeing commercially sensible outcomes with tenants where possible. Our intention is to approach discussions with tenants with a view to preserving the long-term sustainability of the fund’s income.”

The portfolio comprises 30 properties valued at $1.09 billion. Even taking into account risks from the pandemic, underlying net asset value has risen to $1.32 per unit, up from $1.30 per unit a year earlier.

Among the initiatives during its first year on the local bourse, the Investec-run raised $161 million to accompany its Australian listing, followed up with an $84 million placement last September ahead of three industrial acquisitions. It also sold its office tower at 757 Ann Street in Brisbane for $94 million, at an 11 per cent premium to book value.