Newpark REIT lowers interim dividend but raises full-year guidance

Newpark REIT, which owns four properties including the JSE Building, lowered its dividend 13.1% to 26 cents per share for the six months to August 31, but has raised its guidance for the full year.

The JSE-listed company said the dividend was declared after funds from operations per share (FFOPS) declined 24.5% to 26.80 cents from 35.50 cents. However, it revised upwards its FFOPS guidance for the full year to between 41.50 and 48.50 cents a share, with total dividends per share expected to be in line with the FFOPS.

Previously, the company had guided for FFOPS for the year to be between 39 cents and 46 cents. The forecast was revised after taking into account the sale of the Crown Mines property at an assumed transfer date of November 30, 2025, improved revenue at 24 Central, and reduced property operating costs.

“The rate of leasing vacant office space at 24 Central has been slower than initially projected. However, the reduction in rentals resulting from increased vacancies has been partially mitigated by additional advertising revenues and contractual leasing income of excess parking space,” the company’s directors said in the results released on Friday.

Two of the company’s properties are located in the heart of Sandton, Gauteng, the JSE Building and an adjoining mixed-use property known as 24 Central. The third property is in Linbro Business Park and the fourth property, since sold, is in Crown Mines. The properties, as valued by the directors as at August 31, 2025, was R1.05 billion.

Newpark’s net asset value per share declined 3.8% to R5.62 from R5.84. Loan to value was higher at 44.5% from 41.7%. Gross revenue fell by 7.3% to R63.81m from R68.80m. The rarely traded share price stood at R4.80 on Friday afternoon.

The directors said a decrease in revenue and operating profit was mainly as a result of the reversion in the JSE rental, in accordance with the terms of their new lease.

After allowing for fair value adjustments and cost of finance, total profit for the period was R21.8m, well up from R8.3m in the first half of 2024.

“Newpark's balance sheet continues to remain financially sound with a slight increase in loan-to-value level. The weighted average cost of funding, following interest rate cuts and after implementing additional hedges, is 8.88% as at August 31, 2025.

An agreement to sell the Crown Mines property for R99.4m was concluded. The sale of the property, which was deemed to no longer be considered core to the strategy of the company, would not have a material impact on funds from operations per share and net asset value per share in the current financial year.

Proceeds would be used to reduce borrowings, with the impact of reduced rental income being partially offset by lower funding costs.

The weighted average lease expiry for the portfolio was currently 4.9 years, which the directors said provided high quality, predictable cash flows in the medium term.

“The refinancing completed at the end of the 2025 financial year allows for greater funding flexibility at a reduced margin with adequate headroom on debt covenants,” they said.

Some 41.6% of the company’s gross lettable area was for industrial purposes in the interim period, 30.9% for office, 4.9% mixed use (storage) and 22.6% mixed use (retail and office).

The departure of one of the office tenants at the multi-tenanted 24 Central had resulted in an increase in vacancy in that property, and an overall portfolio vacancy of 9.3%.

Visit:www.businessreport.co.za