Tower lifts annual revenue and earnings despite ‘extreme challenges’
Cape-based Tower Property Fund CEO Marc Edwards is confident that the company will, during the 2018 financial year, avoid the problems that derailed its previous financial year.
Tower delivered a resilient performance in “an extremely challenging operating environment in the year to May 2017”, increasing revenue 19% to R447m and distributable earnings 18% to R262m.
Tower declared a distribution of 77.1 c per share for the year, 16% lower than the previous year, mainly because of the decision no longer to distribute once-off earnings to shareholders and uncertainty about the payment of rentals of its largest Croatian tenant, Konzum.
The number of shares in issue increased 42%, during the reporting period.
Tower diversified its portfolio abroad with the acquisition of a €66.4m retail property portfolio in Croatia comprising four shopping centres. This brought the value of its properties in the country to €96m.
Tower’s Croatian arm has struggled to flex its muscle for the group. Its malls are anchored by Konzum, the largest retailer in the country.
Edwards said Konzum was placed under tremendous financial pressure as a result of its parent company, Agrokor, being placed into business rescue.
“The tenant failure in Croatia and the deteriorating political landscape in SA have made recent months particularly difficult for Tower. The slowing consumer economy in SA has negatively affected the performance of several large retailers which is affecting the property market and sentiment,” he said.
Evan Robins, listed property manager of Old Mutual Investment group’s MacroSolutions, said some funds had taken strain from some challenges from their investments in Central Europe. “Tower are dealing prudently with this challenge in respect to their dividend.”