CAPE-based Tower Property Fund grew its distributable earnings 59% to R63m over the six months to November.
The group was moving out of B-grade offices, which were struggling in difficult economic conditions, and buying more retail assets, CEO Marc Edwards said on Friday.
The group increased its interim dividend 27% to 42c per share during the period. Revenue rose 38% to R118m and operating profit grew 37% to R96m.
Mr Edwards said Tower generated a total return of 19% for the 2014 calendar year while expanding the portfolio and enhancing its property greening programme.
Two properties worth R122m together were acquired over the past six months. These are the final phase of the Constantia View Office Park in Quellerina, Randburg, and the Medscheme building in Florida North, Gauteng, which is part of the Medscheme head office.
At the end of the reporting period, the fund had a portfolio of 32 commercial, industrial and retail properties valued at R2.2bn. After November, the fund acquired retail and office properties worth R481m.
These included three convenience shopping centres and the Sun Clare office block in Claremont, Cape Town.
The purchase of a R110m retail property would be announced shortly, bringing total acquisitions for the first quarter of the 2015 financial year to almost R600m.
Mr Edwards said commercial property totalling R900m was under negotiation and the value of the Tower portfolio was expected to reach R3.5bn by financial year end in May.
“We are also confident of meeting our distribution forecast of 86.6c for the financial year,” Mr Edwards said.
Grindrod Asset Management chief investment officer Ian Anderson said he was impressed with Tower’s results. “The forecast for the full year has been maintained and management continue to deliver or their pre-listing objectives. The company has increased its greening initiatives, which have resulted in substantial cost savings at the Cape Quarter in particular.”
The lower bond yield environment allowed the company to refinance some of its borrowings, which would result in finance cost savings of R4.15m a year Robe d’Occasion Spéciale
“We are therefore forecasting that average distribution growth in the sector will top 10% again this year,” Mr Anderson said.