Tower Property Fund results impacted by negative property performance
CFO Joanne Mabin says it is an extremely challenging environment to operate in at the moment.
Tower Property Fund has announced a 17 percent decrease in revenue for the six months ended 30 November 2020 as a result of the sale of properties, Covid-19 concessions given and increased vacancies. This was also partially offset by the weakening of the rand.
“It is an extremely challenging environment to operate in at the moment and we are working closely with all our tenants to ensure their businesses survive and ultimately thrive,” says CFO Joanne Mabin.
Tower reported that property performance has been negatively affected in the first half of the year. Vacancies have increased to 15.2 percent – the highest they’ve ever been. The vacancies are concentrated mainly in Cape Quarter with the departure of Deloitte, the anchor office tenant of the property.
Coupled with rising vacancies, base rentals have also reduced.
Other items that impacted negatively on Tower’s distributable income for the period included increased interest on debt incurred to fund capital expenditure, debt cancellation fees on certain refinanced facilities, the sale of assets at yields higher than the cost of debt and the increased interest expense as a result of the refinancing of €31.5 million debt with rand debt reducing the company’s exposure to currency risk.
Joanne explains that, while the company can’t call the bottom of the market yet, it is working very hard to keep its properties full and driving its rental collections aggressively.
She says she is proud that the company managed to collect 94 percent in rentals during the period, despite the environment.