Emira, ex-tenant locked in dispute

Johannesburg – Listed property fund Emira is in dispute with Australian stock exchange-listed WorleyParsons, one of the largest engineering contractors in South Africa, over the firm’s prematurely vacating a building it leased in Pretoria.

WorleyParsons was a major tenant at Corobay Corner in Menlyn. It vacated the premises on May 31, after contracting to lease the building until February 2022.

Geoff Jennett, the chief executive of Emira, said yesterday that settlement discussions had been rejected by both parties and the case had moved to arbitration. Jennett said the matter was expected to be heard in May.

“Emira remains confident of its legal position,” he said.

Emira reported an 8.8 percent growth in dividends a share to 70.34c for the six months to December from 64.65c in the previous corresponding period.

Revenue, excluding the straight-lining adjustments of future rental escalations, increased by 5.4 percent to R882.9 million from R837.5m. This includes an accrual of R9.3m for the contractual rental due by WorleyParsons for the six months to December minus the rentals achieved on sub-letting portions of the area previously occupied by WorleyParsons.

Jennett said the growth in revenue was positively impacted by the leasing of vacant space, acquisitions and organic growth from the existing portfolio and increased recoveries of municipal expenses, offset by disposals.

Vacancies

Vacancies decreased to 4.7 percent from 4.9 percent in December 2014 and 5.1 percent in December 2013. Jennett said the steady level of low vacancies was the result of focussed leasing in the office sector, retaining tenants within the portfolio and the strategic sale of properties.

He said the 1.7 percent industrial sector vacancy remained substantially lower than the latest SA Property Owners Association (Sapoa) national levels of 4 percent, as did the office sector vacancy of 9.3 percent and retail sector vacancy of 3 percent. Sapoa’s national office vacancy level is at 10.5 percent and 5.3 percent for the retail sector.

Jennett said all portfolio statistics mentioned in Emira’s financial results commentary were based on the assumption that WorleyParsons had remained in occupation at Corobay Corner in accordance with the terms and conditions of its existing lease.

A total of 82 percent of gross lettable area of expiring tenants was renewed during the reporting period.

Emira is a diversified real estate investment trust invested in a balanced portfolio of office, retail and industrial properties. Its assets comprise 146 properties valued at R13 billion and it is internationally diversified through its 4.9 percent direct holding in Australian stock exchange-listed Growthpoint Properties Australia, valued at R942.7m.

Its total combined assets are valued at about R14bn. Emira rose 0.25 percent at R16.04.

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