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