Emira grows distribution as vacancies decline

Although trading conditions remain tough, the property fund has reduced its vacancies and kept a lid on costs.

Emira Property Fund has returned to positive distribution growth thanks to leasing progress, the better utilisation of capital and strict cost controls. The fund reduced its distribution last year due to higher office vacancies, rental reversions, financing costs and a weaker property market.

Emira says trading conditions remained tough in the six months to December, with the ongoing oversupply of offices requiring it to be more competitive by reducing rental and increasing incentives for tenants. Its revenue fell 5.6% from a year earlier to R841 million after it sold 15 properties and reconsolidated the Enyuka Property Fund. However, its stable portfolio performed well, with like-for-like growth of 7.9% over the period due to contractual escalations and the filling of vacancies.

At the end of the period, total vacancies had reduced to 4.5% from 7% a year earlier. Urban retail-sector vacancies fell to 2.2%, while industrial vacancies were marginally higher at 2.1%. Office-sector vacancies decreased to 9.4% from 16.1%. It says it continues to aggressively manage its vacancies through a combination of tenant retention and letting strategies and, in some instances, the sale of non-core properties.

Income from Emira’s investment in Growthpoint Australia increased by 0.9%. While the underlying net Australian dollar distribution per unit rose 2.9%, it says this was largely offset by the reduction in the average hedged foreign exchange rate.

It says distributable income of R38.7 million from equity-accounted investments includes income of R35.9 million from Enyuka and R2.8 million from its US investment. Transaction advisory fees of R7 million have been excluded from its calculation of distributable earnings as they are once-off in nature and relate to the setup of its US investment.

Despite a rise in average debt levels, higher interest-bearing loans receivable led to a 2.5% fall in net finance costs to R189 million.

Its net asset value increased by 1.5% to R17.61 per share due to an increase in the value of its property portfolio and its investment in Growthpoint Australia. It’s raised its interim dividend by 2.5% to 70.65c per share.

Its shares closed 0.5% higher at R15.15 yesterday.

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