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Oryx properties maintains 2012 momentum.

Oryx Properties Limited, a NSX-listed property investment company, this week declared a distribution of 67.25 cents per linked unit for the six months to 31 December 2012. This is an 8.9% increase over the 61.75 cents per unit declared for the comparative period. This compares favourably to the 2013 distribution growth expectation of between 5% and 8% in the SA listed property sector.

In an uncertain global economy investors are still confident that the property sector remains an attractive investment which offers capital growth and a reliable and growing income stream. According to CEO Stefan de Bruin, the property sector usually delivers total returns in excess of inflation, as the performance is underpinned by escalating rental income from contractual agreements. The challenge, however is to manage rising operating costs which stem mainly from above inflation increases in electricity tariffs and municipal charges.

Oryx achieved an increase of 19% in net rental income over the December 2011 comparative period. According to CFO Carel Fourie, this was driven mainly by strong renewals, two new South African industrial property acquisitions during the first half of 2012, a decrease in vacancies from 2.3% to 0.4% and the completion of the new 2800m2 Scania facility which produces rental income from December 2012.

The current low interest rate environment bodes well for Oryx, as the recent acquisitions and developments are funded with variable interest rate loans. Interest rates are expected to remain stable for the remainder of the year, as the upward pressure by inflation may be offset by the need for economic growth stimulation through low interest rates.

The underlying quality of the portfolio is evidenced by the occupancy level which is far above the industry average. Vacancies have decreased from 0.6% at 30 June 2012 to 0.4% at 31 December 2012. Management continues to focus on tenant requirements as tenant retention is an important driver of profitability.

The core portfolio was valued at N$1.38 billion at 31 December 2012. The 9% growth in the value of the portfolio for the six months to December 2012 mainly stems from capitalised costs of the Maerua Mall development. The sectoral spread based on value is 54% retail, 37% industrial and 9% office.

According to Development Director Kelly Clinton, the Maerua Mall extension and upgrade project is progressing according to plan, despite the complexity and challenges inherent in a project of this nature. The project comprises a five story office tower of 3400[m.sup.2], a 1900[m.sup.2] extension of Checkers, a new 2300[m.sup.2] Woolworths and the relocation and extension of Bank Windhoek, Standard Bank and First National Bank. An additional 730 parking bays will be provided as well as improved circulation in and around the centre. An additional amount of N$23m has been allowed for the project to cater for the additional tenant demand. Completion is expected during November this year.

The focus remains on development of existing properties, strategic acquisitions and tenant retention. Oryx unitholders enjoyed a 12.2% total return for the 6 months to 31 December 2012. Looking ahead, the solid base of the core portfolio together with new acquisitions and developments set a foundation for continued real growth.

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Publication:Namibia Economist (Windhoek, Namibia)
Date:Mar 8, 2013
Words:552
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