Emira grows distributions nearly 9%
Emira Property Fund CEO, Geoff Jennett attributed the positive results to fund’s improved portfolio occupancy, acquisitive growth and contractual escalations on most of its portfolio.
Emira Property Fund, the diversified property owner with a market capitalization of R8.1bn, on Wednesday announced 8.8% distribution growth in the six months to December last year.
Increased income from its investment in Growthpoint Properties Australia (GOZ) also supported its distribution growth. The fund managed to achieve a compound annual growth rate in net asset value of 12.4% per annum over a five-year period.
Commenting after the group released results, Geoff Jennett, CEO of Emira, attributed the positive results to fund’s improved portfolio occupancy, acquisitive growth and contractual escalations on most of its portfolio.
Vacancies decreased to 4.7% from 4.9% in December 2014 and 5.1% in December 2013. “Disposing non-core properties, building scale through acquisitions and redeveloping existing assets over the years, boosted our performance,” says Jennett.
Analysts welcomed the results.
“The results were in line with expectations. Offshore diversification through Australia as well as a change in accounting policy has helped to boost the income growth. 9% income growth guidance is pretty good in this environment,” says Keillen Ndlovu, head of listed property funds at Stanlib.
Emira has amassed more than R14bn in assets including its near billion-rand stake in GOZ. The fund says it will become an acquirer in the listed property space in the near future.
This growth will continue Emira’s current portfolio diversified balance across the traditional property sectors of office, retail and industrial as well as offshore real estate investment trust holdings. It will also cautiously begin a low-risk consideration of non-traditional sectors, which could include residential property, among others.
It entered into agreements to dispose of R421 million worth of properties during its half year and acquired properties to the value of R240 million. Its acquisitions include a 50% undivided share in Mitchells Plain Shopping Centre in the Western Cape for R75.3 million; a 50% undivided share in five buildings comprising Summit Place; and a commercial development in Menlyn, Pretoria worth R403 million.
The group has property redevelopments and extensions worth R515.1 million currently underway,
But its two most significant redevelopments include Kramerville Corner and Knightsbridge Manor office park, both in Gauteng.
Kramerville Corner, Sandton, will be completely upgraded and refurbished by the end of next month (March 2016) in a R69,4m project. Emira’s R795m phased redevelopment of Knightsbridge in Bryanston, from a 10,000sqm B grade office park to 30,000sqm of P grade green certified offices, started in November 2015. The first building, which is 50% pre-let, is scheduled for completion in May 2017. The rest of the project will be developed in line with tenant and market demand at the time.
Meago Asset Managers director Jay Padayatchi, says: “I am a bit concerned about the Knightsbridge development in Bryanston, which has recently kicked off, as it is slightly off the main drag (William Nicol and Main Road) and there is uncertainty whether the right client profile will be attracted to it.”
At the close of the half-year, the fund continued to hold a moderate level of gearing with a loan-to-value ratio of 33.7%. In addition, 84.9% of its debt is fixed for an average duration of 3.1 years.
Emira is a diversified mid-cap Reit invested in assets comprising 146 properties valued at R13bn. it is also internationally diversified through its 4.9% direct holding in ASX-listed GOZ, valued at R942,7m. Combined, its total assets come to R14bn.
Jennett says that despite the further weakening of the South African economy, Emira is on track to continue its past performance and deliver similar distribution growth for its full year in line with original guidance.