Arrowhead convinced it can keep distribution growth promise

By Alistair Anderson

Listed property loan stock company Arrowhead Properties (AWA‚ AWB) is convinced it can keep its distribution growth promise every year‚ chief investment officer Mark Kaplan said on Wednesday.

The group released its financial results for the year to September on Wednesday‚ a period in which it achieved 12.36% growth in distributions. This was above the 7% average growth achieved in the sector and the fund’s forecast 10% distribution growth for the year.

Arrowhead recorded a distribution of 113.01c per combined A and B linked unit.

“Many people in the market said we were going in too hard when we listed Arrowhead at the end of 2011 but we have beaten expectations so far. We believe while we are buying properties at an aggressive pace‚ we are buying what we can manage well and we can guarantee returns which beat the market‚ to shareholders‚” Kaplan said.

The listed property index has struggled this year. It shed 21% of its value between mid-May and mid-August but has since recovered about 10% of its losses.

That placed the sector on a forward yield of an average 7.4% versus 6.7% in mid-May.

Analysts were impressed with the results from the fledgling property group. “Arrowhead’s management has grown earnings 12.36% for combined units through managing costs‚ yield-enhancing acquisitions and improving the quality and mix of their portfolio.

“Given Arrowhead’s A B unit structure and solid performance‚ B unit holders can expect to outperform the general property sector and receive exceptional distribution growth of 20%-22% over the next 12 months‚ and A unit holders can begin to expect to now receive 6%-8% distribution growth over the next 12 months‚” property fund manager at Alternative Real Estate‚ Maurice Shapiro‚ said.

Arrowhead’s management had consistently grown the fund’s portfolio with yield-enhancing acquisitions adding value for both A and B linked units‚ he said.

The most recent acquisition of a R406m residential property portfolio was in line with Arrowhead’s strategy to provide growth opportunities and greater diversification.

Meago Asset Managers director Jay Padayatchi said unit holders were receiving distribution growth earlier than expected.

Arrowhead CEO Gerald Leissner said he intended for Arrowhead to be a company which grew and eventually acquired other funds as opposed to being a group which itself would be acquired by a property giant.

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