Newpark Reit, the property company that owns the
JSE’s office building, has released one of this reporting season’s worst
set of financial results, with its dividend falling 6.4% in the six
months to August as the company struggled to fill vacancies.
Newpark is one of the smallest specialist property companies listed
on the JSE with a market capitalisation of about R600m and four real
estate assets worth about R1.38bn. It was listed with the aim of
providing investors with consistent dividend growth.
Distributable earnings for the reporting period declined 6.4% to
24.95c per share for the first half of the 2019 financial year compared
with 26.65c per share for the comparative 2018 period.
The board declared an interim dividend of 24.94859c per share.
The company owns the JSE’s Sandton head office; retail centre 24
Central which lies next to it; a property in Linbro Business Park; and
another in Crown Mines. It blamed weak economic growth and a lack of
demand for space at 24 Central for its poor performance. It also said a
major office tenant had left one of its office buildings.
“The vacancies, which started to increase during the six months to
February 28 2018, continued further with a large tenant deciding to
consolidate its office footprint into their main office space. Expense
controls were applied to mitigate the impact of this loss of revenue but
could not compensate entirely for the impact on distributable
earnings,” the company said.
The group said overall group vacancies had increased significantly
during the period to 17.4% from 11.2% at the end of February 2018, and
it made no acquisitions during the reporting period but was considering
ways of expanding in SA and abroad.
“The strategy is to seek well-positioned prime commercial and
industrial properties which provide quality cash flows with the
potential of upward rating on lease renewals and/or redevelopment
opportunities within the medium to long term.”
andersona@businesslive.co.za
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