Transcend hit with additional municipal fees

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Transcend hit with additional municipal fees

Published Date: 2021-02-16 | Source: Stephen Gunnion | Author: Stephen Gunnion

Transcend hit with additional municipal fees

The residential property fund has lowered its full-year distribution but is disputing the back charges it received.

Transcend Residential Property Fund has reported a decline in its full-year distribution after the City of Johannesburg (CoJ) hit it with additional charges and due to the impact of Covid-19. However, it says it has maintained a sound financial footing and can meet all its debt obligations.

The real estate investment trust, which shifted to the JSE's main board a year ago, said the 14.4% decrease in its distribution per share to 55.75c was mainly as a result of once-off CoJ back-charges of R8.96 million on all its Johannesburg-based properties. The charges levied represented increased sewer charges for the 2018, 2019 and 2020 financial years, after the city reclassified its portfolio from "block of flats" to "multi-dwelling units". It said it was currently disputing the charges and was considering remedial action to address them. It also experienced a portfolio-wide increase in vacancies and bad debts as a result of the pandemic and the resultant lockdown.

For the year to end-December, revenue declined by 3.3% to R325 million and operating profit rose 13% to R179 million. It reported a loss per share from continuing operations of 25.99c - mainly as a result of an unrealised loss on the revaluation of interest-rate swaps as well as fair value losses of properties. It ended the year with 4,267 units and a portfolio value of R2.51 billion. Occupancies at the end of December were down to 91.7% after averaging 93.4% over the year. Its net asset value amounted to R8.87 per share, down 4.7% from 2019.

The fund's loan-to-value (LTV) increased slightly to 53.54%, above its targeted long-term ratio level of 40%. It planned to reduce the LTV within the short-to-medium term by raising equity and using proceeds from the sale of units at some of its properties to pay down existing debt facilities.

Transcend's shares closed unchanged at R5 yesterday.





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