| Nature Of Business |
| Newpark is a property holding and investment company that is currently invested in A-grade commercial and industrial properties. |
| Property Portfolio |
| Newpark’s property portfolio consists of four properties. Two are located in the heart of Sandton, Gauteng, namely the JSE Building which has 18,533 m2 of gross lettable area (“GLA”) and an adjoining mixed-use property known as 24 Central, which has 16,526 m2 of GLA. The third property is situated in Linbro Business Park which has 13,713 m2 of GLA and the fourth property is in Crown Mines which has 11,277 m2 of GLA. The combined valuation of these properties, undertaken by the directors as of 31 August 2024 was R1,042 billion. |
| Key Financial Highlights |
| |
Unaudited |
Unaudited |
Change |
| 31 August |
31 August |
% |
| 2024 |
2023 |
|
| Funds from operations per share (“FFOPS”) (cents) 1 |
35,50 |
40,18 |
(11,7) |
| Dividend per share (cents) |
30,00 |
35,00 |
(14,3) |
| Total assets (R000) |
1 112 532 |
1 355 039 |
(17,9) |
| Net asset value per share (Rand)1 |
5,84 |
8,16 |
(28,4) |
| Loan to value ratio (%)1 |
41,7% |
33,3% |
|
| Gross revenue (R000) |
68 803 |
68 753 |
(0,1) |
| Operating profit before fair value adjustments |
45 996 |
48 862 |
(5,9) |
| Earnings/(loss) per share (cents) |
8,33 |
(42,12) |
119,8 |
| Headline earnings / (loss) per share (cents) |
21,72 |
27,88 |
(22,1) |
1 Financial measure determined by the SA REIT Best Practice guidelines. |
| Commentary On Results |
| The Company’s board of directors (“Board”) is pleased to present the Group’s interim results for the period under review. |
| Notwithstanding subdued market conditions, the valuations of Newpark’s property portfolio have remained in line with the 29 February 2024 values with the only change during the interim period of six months being to the value of the JSE building where the lease with the JSE has been extended to December 2030. The valuation on 31 August 2024 accounts for an anticipated negative reversion of rentals to market-related levels on 1 April 2025. |
| Revenue for the six months ended 31 August 2024 was R68,8 million, an increase of 0,1% compared to the same period in FY2024, and operating profit before fair value adjustments was R46,0 million (down 5,9%) predominantly as a result of increased property and administration costs. During the period, there was an R2,5 million downward adjustment in value on the interest rate hedges and a downward adjustment of R13,4 million on investment properties. Allowing for fair value adjustments and the net cost of finance, the total comprehensive profit for the period was R8,3 million (H1 FY2024 loss: R42,1 million), representing a profit per share of 8,328 cents per share (“cps”) (H1 FY2024 loss: 42,117 cps). |
| Funds from operations per share (“FFOPS”) for the period were 35,498 cps which represents an 11,7% decrease from the same period in FY2024. The decrease is attributed to the reversion in rental at HellermannTyton and increased property and administration costs. The negative impacts were partially offset by escalations in rentals at the JSE and Crown Mines properties as well as increased retail occupancies and advertising income at 24 Central. |
| Following the extensions of the HellermannTyton and the JSE leases, which commenced on 1 January 2024 and 1 August 2024, respectively, the weighted average lease expiry (by GLA) for the portfolio increased to 5,8 years. |
| Newpark’s balance sheet continues to remain financially sound with a loan-to-value level (“LTV”) of 41,7% (FY2024: 41,1%). Whilst one of the debt covenant measures exceeded the required level as of 31 August 2024, the debt providers have condoned the breach pending the outcome of the extension of the term of debt referred to below. |
| Debt facilities of R150,0 million will mature in May 2025 and have been reflected under current liabilities. Management is engaging with debt providers to extend the maturity dates of the facilities. The strong interest cover ratios together with an extended weighted average lease expiry profile are expected to support a favourable debt extension outcome, resulting in a longer overall debt maturity profile. |
| The Group’s weighted average cost of funding, following the maturity of one of the interest rate hedges, is 9.300% (31 August 2023:9,258%). Hedges remain in place for 63,8% of the Group’s drawn debt exposure as of 31 August 2024. |
| Interim Dividend Per Share |
| After considering the interim decrease in FFOPS and the outlook for the remainder of the year, Newpark has declared an interim dividend of 30,00 cents per share, a decrease of 14,3% compared to the dividend per share of 35,00 cents per share for the six months ended 31 August 2023. |
| Outlook |
| After having concluded the lease extension with the JSE, the weighted average lease expiry for the portfolio has increased to 5,8 years, providing a positive outlook for the group with its high-quality, medium-term predictable cash flows. The positive outlook is further supported by improving market conditions and the start of the interest rate-cutting cycle. |
| A portion of the group's Group’s borrowings will mature in May 2025 and the debt providers will be engaged in order to refinance the borrowings and to re-align the Group’s balance sheet and covenants with the operational cash flow profile of the business. |
| Guidance given to the market on Newpark’s budgeted FFOPS for the year ending 28 February 2025 was between 50,00 and 60,11 cents per share, being a decrease of between 25,9% and 38,4% when compared to the FFOPS for the year ended 29 February 2024 of 81,11 cents per share. The board has now updated the FFOPS guidance to a revised FFOPS for the year ending 28 February 2025 of between 67,00 and 78,00 cents per share, being a decrease of between 3,8% and 17,4% when compared to the FFOPS for the year ended 29 February 2024 of 81,11 cents per share. The revised budgeted FFOPS takes into account the terms of the early JSE lease extension, effective from 1 August 2024, with the negative impact of the rental reversion in terms of the lease having been deferred until the next financial year. The contracted lower rentals in terms of the JSE lease extension will result in a 48,5% reduction in rent receivable from the JSE for the financial year ending 28 February 2026 as compared with the current financial year. |
| The dividend per share, for the year ended 28 February 2025 is budgeted to be in line with the revised FFOPS of 67,00 and 78,00 cents per share being between 4,8% below and 10,8% above the total dividend of 70,37 cents per share declared for the year ended 29 February 2024. |
| The forecast is based on the assumption that there is no material change to the macro-economic environment, no material tenant default will occur, operating cost increases will not exceed inflation and no changes will be made to the property portfolio. This updated forecast has not been audited or reviewed by the Company’s auditors. |
| For the full document click the link below: |
| Newpark Reit Limited |
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