Allan Gray Property Trust Announces 2006 Results

Allan Gray Property Trust (Grayprop) has declared distributions for the year ended 30 September 2006 of 39 cents per unit, up 11.4% on last year.

The increase is made up of a 13% increase in earnings in the retail portfolio, a 22% increase in the office commercial portfolio, an increase of 5% in the industrial portfolio and a 7% increase in the specialised portfolio. 

Corporate expenses for the year increased by 33% due to higher borrowings and a higher unit price, both of which contributed to higher management fees.

John Rainier, Managing Director of Grayprop says, "We are delighted with the results this year which show ongoing strength especially in the commercial and retail sectors."

Grayprop participates in the IPD South Africa annual benchmark survey, which measures the performance of its underlying direct property portfolio against other listed funds. For 2005, Grayprops total return came in second out of 17 participants at 53.9% compared with the benchmark of 33.8%.

"In addition, it won the annual award for the best 3-year performance of its office and industrial portfolio, having won the retail category 2 years ago - this makes Grayprop the only fund to have won all three categories so far," says Rainier.

The value of the portfolio is once again higher than the previous year, with net asset value up 25% from 2005 at R5.22 per unit. This means the property portfolio is on an 8.7 forward earnings yield at this value.

One of the highlights of the past year was the completion of N1City. This has shown a 30% growth in sales and 47% increase in footcount over the previous year, during the first months trading.

Alterations have commenced at Benmore Gardens to improve the retail mix, parking and circulation at a net total cost to Grayprop of R66 million. Work is also underway to provide a new store for Pick 'n Pay, a relocated Dischem and the introduction of a Woolworths food store, a Toyzone and Baby City. Rainier says that due to the nature of the project, it will take two years to complete which will negatively impact earnings generated by the centre during that period. "But given the central location of this property and the pace of residential developments in its vicinity, we believe the alterations will position it well for superior future growth in earnings. It is anticipated to have an initial yield of 8.5%."

At Centurion Mall, work has commenced on the R268 million extensions and refurbishment of the Mall, and the construction of additional parking facilities. The project is expected to be completed by September 2007 and is anticipated to generate an initial return of 9%.