Maintenance expenditure weighs on Putprop results
The proposed delisting of Putprop, the separately listed former property investment company of delisted bus transport operator Putco, is close to finalisation.
|||Johannesburg - The proposed delisting of Putprop, the separately listed former property investment company of delisted bus transport operator Putco, is close to finalisation.
Putprop said on Friday that an offer to repurchase those shares affected would be “forthcoming in the near future”. This follows Putprop in September reporting that it was considering delisting the company form the JSE.
The company said at the time it was envisaged the delisting would be implemented through the repurchase and cancellation of Putprop shares, excluding the shares held by Carleo Enterprises, the company’s largest shareholder.
Putprop on Friday reported a 9 percent decline in distributions a share to 10c in the six months to December from 11c in the previous corresponding period. Gross property revenue increased by 10 percent to R29.8 million from R27.1m. Property expenses rose by 23.5 percent to R9.2m from R7.5m.
Bruno Carleo, the chief executive of Putprop, attributed this increased expenditure on preventative maintenance on several of the company’s older properties.
Trading conditions
Carleo said maintenance expenditure was expected to continue to be high in the second half of the year because substantial upgrades were needed to several of the company’s older properties on a health and safety level and on roofing renovation projects.
Profit after tax decreased by 5.3 percent to R17m from R17.9m. Carleo said this resulted from the increase in property expenses.
The company in the reporting period concluded the sale of the Selby depot to the City of Johannesburg for R65m. This was one of six properties that were to be vacated in December by the Larimar Group, the group’s major tenant which, among other things, operates the Putco passenger bus company.
The Larimar Group accounts for 81 percent of the contractual rental income received by Putprop but did not renew lease on six of the properties they were tenanting.
Carleo said the loss of this tenant would have an impact on the group’s annual financial results to June.
He said that of the remaining five properties, the Mamelodi depot had been leased to Autopax on a three-month contract on favourable terms with an option to renew on a rolling three-month basis.
Carleo said the Larimar Group had also indicated it wished to continue occupying the properties it had given notice on for an additional three months to March.
He said management was actively focusing on obtaining tenants for these properties once Larimar vacated them, but the vacancy levels for the portfolio would increase to 23.5 percent from 4.7 percent in December 2014.
Putprop’s portfolio comprises 16 predominantly industrial properties located primarily in Gauteng with a gross lettable area of 81 259 square metres valued at R474.2m.
Carleo said trading conditions during the second half of Putprop’s financial year were expected to continue to be challenging.
He added that the property market both locally and internationally was expected to remain subdued in the second half of the year.
But Carleo said they would continue to focus on growing the portfolio, with the possibility of joint ventures with partners with similar strategies still under consideration.
The share price gained 0.14 percent to close trade at R7 on the JSE on Friday.
BUSINESS REPORT