Synergy well positioned for future growth

Listed property loan stock company Synergy Income Fund (SGA‚ SGB) delivered total returns of 27.7% and 27.5% for its A and B linked unitholders respectively during 2012‚ according to Catalyst Fund Managers.

Synergy A and B linked units outperformed South African bonds and cash‚ and the fund was well positioned to produce growth in income distributions‚ according to Catalyst Fund Managers.

Synergy‚ a specialised retail property fund that listed on the JSE in December 2011 and focuses on shopping centres catering to lower living standards measure (LSM) sectors‚ has assets of R1.7bn and a market capitalisation of about R1.2bn.

The fund has targeted new rural and township retail developments but has also acquired existing shopping centres‚ specifically in the lower LSM market.

It has identified the structural undersupply of shopping centres in townships and rural areas as an opportunity for growth.

Catalyst Fund Managers investment manager Paul Duncan said on Monday that the specialised nature of the portfolio was driving “a focused approach” to the asset and property management of the fund’s portfolio.

”Since listing‚ Synergy has improved its overall portfolio quality with acquisitions like Gugulethu Square in Cape Town and Setsing Crescent in Phuthaditjhaba.

“Despite some delays experienced with the transfer of the original portfolio‚ Synergy appears well placed to deliver attractive growth in income distributions‚” Duncan said.

The fund has closed 11 acquisitions and delivered 521% growth in assets since it listed on the JSE 13 months ago.

In August last year‚ Synergy closed an oversubscribed vendor consideration placement of R376m in new linked units to fund new assets‚ while in October it brought its full property management operations in-house to better align management structures to investor objectives.

The fund’s CEO William Brooks said on Monday: “We’re pleased with our performance in our first 12 months since listing and for 2012.

“Synergy’s portfolio is well positioned to benefit from structural socio-economic growth in the lower LSM and middle market sector in SA - our direct active management structure supports this.”

Brooks said Synergy would continue to identify opportunities to grow its portfolio.

In its maiden set of results‚ the fund posted distributions of 44.22c per A linked unit and 19.53c per B linked unit for the year to June 30‚ 2012‚ which was in line with its projections prior to listing.

Synergy’s A units have risen 28.1% over the past 12 months while its B units have grown 23.3%.