JSE investors warm to EPP, Poland’s ‘strong operator’
The group has achieved a total return of 19% so far in 2018
EPP, the Polish real-estate group in which SA-based Redefine Properties owns a 39% stake, has cemented itself as one of the standout property investments on the JSE so far in 2018.
The company released strong financial results for the nine months to September on Thursday, making it an attractive investment for South Africans in 2018 so far, achieving a total return of 19% while the FTSE/JSE South African Listed Property Index has struggled, delivering a total return of -24%.
Some analysts have said investors are starting to warm to EPP as the company has successfully settled down after teething issues in 2016 and 2017. It has managed to broaden its investor base during this period.
"We like EPP. They are a strong operator in a a very strong market and they have improved their asset management this year. Polish growth is supported by factors in Poland itself as well as its neighbour, Germany," Keillen Ndlovu, head of listed property funds at Stanlib, said.
EPP which has a market capitalisation of about R15.2bn, grew its net property income 37% year-on-year to €102.2m, its results showed. This was as the company, which is invested in shopping centres and offices across eastern Europe's largest economy, continued to benefit from strong GDP as well as retail sales growth.
EPP is continuing in its strategy of disinvesting from offices so it can focus on being the largest owner of retail centres in Poland. It has a portfolio of 19 retail properties, six office buildings and two development sites in capital city Warsaw, with one under construction.
CEO Hadley Dean said he was happy with the company's performance so far in 2018 and that earnings available for distribution per share were 8.75 euro cents, meaning that the company was on track to meet its stated guidance of 11.6c-11.8c per share for the full year to December.
This is while a number of other listed property funds on the JSE have had to slash their dividend forecasts due to weak economic growth.
“Operationally the business continues to perform well, with like-for-like net rental income growth for the nine months of 4.2%,” said Dean.
He said EPP's retail centres had performed strongly in the reporting period as Poland's economy continued to thrive. Poland's economy was expected to grow 4.4% in 2018.
Anchor Stockbrokers real-estate analyst Wynand Smit said EPP's results were in line with expectations but that the like-for-like rental income growth was "especially pleasing".
EPP’s property portfolio exceeded €2bn (R31.97bn) in value at the end of September.