Emira’s focus on portfolio pays dividend
EMIRA Property Fund has provided its shareholders with market-beating returns, following careful management of the group’s portfolio.
After the 2008 global economic crisis, the group grappled with vacancies and struggled to sell some of its weaker properties, especially offices.
But its total return for the six months to December was 22.2%.
Emira is a real estate investment trust listed on the JSE. Its assets are 148 properties valued at R12.5bn.
It is also internationally diversified through its direct interest in Melbourne-listed Growthpoint Properties Australia, valued at about R700m.
Over the past year, Emira’s share price has risen about 42%, beating the JSE South African property index’s 34% gain.
“Our investors have shown tremendous support for Emira, so it is most gratifying that they are now being rewarded with above-average total returns,” CEO James Templeton said.
The distribution growth per participatory interest was 9% for the half-year to December, it said in financial results on Wednesday. Analyst expectations had been for 8.5% distribution growth.
Maurice Shapiro, portfolio manager at Ma’alot Investments, said Emira was a strong performer last year and these results were “impressive”.
“Emira’s focus on hands-on management has delivered a reduction in vacancies over the past two years from 7.8% in December 2012 to 4.9% in December 2014,” he said.
“We appreciate Emira management’s innovative thinking with their recent solar farm on the roof of Epsom Downs Shopping Centre.
“Projects like this not only talk to Emira’s sustainability strategy but also to their focus on tenants’ occupational costs — simply, it makes good business sense to think about your customers,” Mr Shapiro said.
Emira’s net asset value rose 14% during the six months, to 1,650c per participatory interest, while its distributable income grew 13% to R330m.
Mr Templeton said: “Emira’s operational performance is the best it has been in a long time. Our like-for-like net property income growth of 8.6% is a fantastic achievement.
“We’re delivering excellent progress in all key areas of the business and have solid strategies in place to continue this performance,” he said.
He expected to achieve similar levels of distribution growth for the full year to end-June.
Reducing vacancies had been a key part of Emira’s strategy over the past few years, Mr Templeton said.
Emira’s tenant retention by gross lettable area improved to 77% from 70% a year earlier. Mr Templeton said the group had also been careful with its debt management.
Lowering its cost of debt and its risk, in November last year Emira concluded debt swaps that added R8m to the group on an annualised basis, supporting distribution growth for shareholders.
Refurbishment and extensions under way in the reporting period were valued at R819.4m. The most significant was a R551.3m upgrade to Wonderpark Shopping Centre in Pretoria.
This asset’s size increased from 63,000m2 to 90,000m2 to include extensions for existing national tenants and introduce new anchors.
Income from the Growthpoint Australia investment rose 16% because distributions rose and the rand weakened against the Australian dollar.