ABOUT EMIRA

Emira is a diversified real estate investment trust (“REIT”) company, with a property portfolio of predominantly South African assets, and a growing component of offshore assets. The Company listed on the JSE in November 2003, in the real estate investment trusts sector. In line with its strategic objectives, Emira’s property portfolio spans multiple sectors, namely office, retail and industrial, with a new element of residential.

The Company is focused on growing the quality and value of its property portfolio, in order to sustain and enhance its distribution growth to shareholders.

This is achieved via selective acquisitions and disposals, as well as refurbishments, upgrades and the redevelopment of specific properties. To this end, all investment decisions are reinforced by Emira’s stringent investment criteria to enhance yields and improve the performance of the portfolio.

 

DIRECT SOUTH AFRICAN PORTFOLIO

As at 30 June 2020, Emira had a total of 79 properties with a total asset value of R10,2 billion, a market capitalization of R3,3 billion, and paid a full year dividend of 104,36 cents per share.

PURPOSE

 

We fulfil our purpose of being great in the provision of great real estate by following a path that management, guided by our Board, has set in order to maximise performance and achieve our goals. In this section, we summarise how we lived up to our purpose during the year under review, with cross references for further reading throughout the report.

 

First and foremost, we are fundamentally in the business of providing great real estate to our tenants.

HOW WE LIVED UP TO OUR PURPOSE

We reduced the significant impact of the COVID-19 lockdown on our tenants, by assisting them in the following ways:

› Protecting tenants’ businesses and livelihoods by way of rental remissions and payment deferments.

› Addressing tenants’ safety and health concerns at all our buildings during the lockdown.

› Sharing the burden with tenants, making plans together for business continuity.

 

Our aim is to support our staff and service providers by creating environments in which they can thrive and deliver service excellence to our tenants.

HOW WE LIVED UP TO OUR PURPOSE

To safeguard the longevity of Emira, we ensured that our staff and service providers were equipped to weather the lockdown by:

› Encouraging our staff and service providers to work remotely and safely, while still servicing and engaging our tenants.

› Providing face masks and other necessary items of personal protective equipment (“PPE”).

› Paying full salaries to our staff throughout the lockdown period.

› Providing full payment to service providers including the property manager, despite rental collections being affected by the lockdown.

 

We believe in leading by example and conducting ourselves responsibly as a business within our communities and the environment.

HOW WE LIVED UP TO OUR PURPOSE

Despite unprecedented, tough conditions during the year, we made a positive impact on our world by:

› Contributing 30% of executives’ salaries and directors’ fees to the Solidarity Fund for a total of R1 million.

› Finding temporary employment opportunities for retail tenant employees out of work due to lockdown regulations.

› Continuing our efforts to provide backup power generation, water harvesting and greening initiatives at our buildings.

 

Our goal is to provide secure, reliable returns for our debt providers, and deliver top quartile long-term income and share price returns for our equity holders.

HOW WE LIVED UP TO OUR PURPOSE

In terms of our debt providers:

›  During the lockdown we communicated with each of our banking partners on a weekly basis to provide updates on rental collections, as well as stress tests on the portfolio.

› We ensured that our covenants were met throughout the lockdown.

› Our bankers are aware of and comfortable with Emira’s financial position due to our regular interactions prior to COVID-19.

In terms of our equity holders:

› We provided regular, transparent business updates on our position in uncertain times.

› We shared vital portfolio metrics as well as performance targets with our equity holders to keep them informed.

› We communicated our plans to meet our covenants, provide discounts to tenants, and pay staff and service providers.

› Staying true to our core principles, we managed our balance sheet and paid a dividend.

 

HOW IT ALL COMES TOGETHER

By following the path of our purpose, we ensure the sustainability of our business. This ensured that we did not place too much emphasis on any one pillar to the long-term detriment of any of our other pillars. By first taking care of our tenants, we then look after our staff, service providers, communities and the environment. Following this path, we are able to live up to our primary purpose as great providers of great real estate, honour our covenants, and secure great long-term returns for our equity holders.

VISION

To grow earnings from a balanced and high quality property portfolio

MISSION

To deliver long-term value to our shareholders and stakeholders

VALUES

RESPONSIBILITY:  We hold ourselves responsible and accountable to our stakeholders for our actions

HONESTY:  We are truthful

FAIRNESS:  We treat all our stakeholders equitably

RESPECT:  We acknowledge and respect the rights and dignity of others

DOING BUSINESS, THE EMIRA WAY

 

In a more troubled, changing world, “the Emira way” embodies how we choose to do business — with honesty, transparency and mutual respect. By consistently applying mutual respect in everything that we do, it guides the manner of our dealings with colleagues, shareholders, tenants, communities, investment partners, property managers and other stakeholders.

With an open-door policy in place, the executive team stays informed and in touch, while fostering a working environment that encourages employee empowerment and interaction, equal participation and the free flow of ideas. The Emira way is at the heart of all dealings with our local and offshore co-investment partners — who were all carefully selected not just for their expertise, but for the high business morals and principles we have in common. In light of the recent failures of good corporate governance, it has become increasingly important to associate with people and companies of high moral standing to protect the future of the corporate world as well as society at large.

For us, doing business the Emira way may sometimes take a little longer, but ultimately getting there will not be at the expense of our integrity and good reputation.

It stands to reason that Emira’s priorities have changed, given the current global environment, particularly operating under the very different circumstances of COVID-19. Whereas in the past, the Company’s endeavours have had particular focus on areas such as growing distributions, portfolio growth, diversification and rebalancing, the priorities for the next 12 to 24 months are slightly different.During this time, the Company’s strategy has become more defensive, while still closely aligning to Emira’s purpose.

 

FINANCIAL
OBJECTIVE

› Optimise net income and grow distributions in excess of pre-set targets Target gearing to be limited to 40% of total assets

› Target gearing to be limited to 40% of total assets

 

PORTFOLIO
OBJECTIVE

› Selectively recycle and upgrade assets

› Have a balanced sectoral and geographical exposure

› Dispose of non-core or non-performing properties

› Maintain vacancy level at below national average and manage lease expiry profile

 

STAKEHOLDER
OBJECTIVE

› Increase market capitalisation, liquidity and spread of investors

› Reduce Emira’s environmental impacts

› Improve Emira’s transformation credentials

 

In terms of the overall portfolio, the aim is to preserve, bed down and strengthen the balance sheet that Emira currently has, rather than making major adjustments amid the prevailing uncertainty. It is fortunate that due to the various portfolio interventions implemented by management during previous years, the Fund is better able to safely navigate and manage these unprecedented times.

With the above in mind, the following table sets out Emira’s strategic objectives as they stand, however, 2020 performance and future targets should be viewed in the context of the changing global environment during the year under review.

Emira is a diversified real estate investment trust (“REIT”) company, with a property portfolio of predominantly South African assets, and a growing component of offshore assets. The Company listed on the JSE in November 2003, in the real estate investment trusts sector. In line with its strategic objectives, Emira’s property portfolio spans multiple sectors, namely office, retail and industrial, with a new element of residential.

The Company is focused on growing the quality and value of its property portfolio, in order to sustain and enhance its distribution growth to shareholders.

This is achieved via selective acquisitions and disposals, as well as refurbishments, upgrades and the redevelopment of specific properties. To this end, all investment decisions are reinforced by Emira’s stringent investment criteria to enhance yields and improve the performance of the portfolio.

 

DIRECT SOUTH AFRICAN PORTFOLIO

As at 30 June 2020, Emira had a total of 79 properties with a total asset value of R10,2 billion, a market capitalization of R3,3 billion, and paid a full year dividend of 104,36 cents per share.

PURPOSE

 

We fulfil our purpose of being great in the provision of great real estate by following a path that management, guided by our Board, has set in order to maximise performance and achieve our goals. In this section, we summarise how we lived up to our purpose during the year under review, with cross references for further reading throughout the report.

 

First and foremost, we are fundamentally in the business of providing great real estate to our tenants.

HOW WE LIVED UP TO OUR PURPOSE

We reduced the significant impact of the COVID-19 lockdown on our tenants, by assisting them in the following ways:

› Protecting tenants’ businesses and livelihoods by way of rental remissions and payment deferments.

› Addressing tenants’ safety and health concerns at all our buildings during the lockdown.

› Sharing the burden with tenants, making plans together for business continuity.

 

Our aim is to support our staff and service providers by creating environments in which they can thrive and deliver service excellence to our tenants.

HOW WE LIVED UP TO OUR PURPOSE

To safeguard the longevity of Emira, we ensured that our staff and service providers were equipped to weather the lockdown by:

› Encouraging our staff and service providers to work remotely and safely, while still servicing and engaging our tenants.

› Providing face masks and other necessary items of personal protective equipment (“PPE”).

› Paying full salaries to our staff throughout the lockdown period.

› Providing full payment to service providers including the property manager, despite rental collections being affected by the lockdown.

 

We believe in leading by example and conducting ourselves responsibly as a business within our communities and the environment.

HOW WE LIVED UP TO OUR PURPOSE

Despite unprecedented, tough conditions during the year, we made a positive impact on our world by:

› Contributing 30% of executives’ salaries and directors’ fees to the Solidarity Fund for a total of R1 million.

› Finding temporary employment opportunities for retail tenant employees out of work due to lockdown regulations.

› Continuing our efforts to provide backup power generation, water harvesting and greening initiatives at our buildings.

 

Our goal is to provide secure, reliable returns for our debt providers, and deliver top quartile long-term income and share price returns for our equity holders.

HOW WE LIVED UP TO OUR PURPOSE

In terms of our debt providers:

›  During the lockdown we communicated with each of our banking partners on a weekly basis to provide updates on rental collections, as well as stress tests on the portfolio.

› We ensured that our covenants were met throughout the lockdown.

› Our bankers are aware of and comfortable with Emira’s financial position due to our regular interactions prior to COVID-19.

In terms of our equity holders:

› We provided regular, transparent business updates on our position in uncertain times.

› We shared vital portfolio metrics as well as performance targets with our equity holders to keep them informed.

› We communicated our plans to meet our covenants, provide discounts to tenants, and pay staff and service providers.

› Staying true to our core principles, we managed our balance sheet and paid a dividend.

 

HOW IT ALL COMES TOGETHER

By following the path of our purpose, we ensure the sustainability of our business. This ensured that we did not place too much emphasis on any one pillar to the long-term detriment of any of our other pillars. By first taking care of our tenants, we then look after our staff, service providers, communities and the environment. Following this path, we are able to live up to our primary purpose as great providers of great real estate, honour our covenants, and secure great long-term returns for our equity holders.

VISION

To grow earnings from a balanced and high quality property portfolio

MISSION

To deliver long-term value to our shareholders and stakeholders

VALUES

RESPONSIBILITY:  We hold ourselves responsible and accountable to our stakeholders for our actions

HONESTY:  We are truthful

FAIRNESS:  We treat all our stakeholders equitably

RESPECT:  We acknowledge and respect the rights and dignity of others

DOING BUSINESS, THE EMIRA WAY

In a more troubled, changing world, “the Emira way” embodies how we choose to do business — with honesty, transparency and mutual respect. By consistently applying mutual respect in everything that we do, it guides the manner of our dealings with colleagues, shareholders, tenants, communities, investment partners, property managers and other stakeholders. With an open-door policy in place, the executive team stays informed and in touch, while fostering a working environment that encourages employee empowerment and interaction, equal participation and the free flow of ideas. The Emira way is at the heart of all dealings with our local and offshore co-investment partners — who were all carefully selected not just for their expertise, but for the high business morals and principles we have in common. In light of the recent failures of good corporate governance, it has become increasingly important to associate with people and companies of high moral standing to protect the future of the corporate world as well as society at large. For us, doing business the Emira way may sometimes take a little longer, but ultimately getting there will not be at the expense of our integrity and good reputation.

It stands to reason that Emira’s priorities have changed, given the current global environment, particularly operating under the very different circumstances of COVID-19. Whereas in the past, the Company’s endeavours have had particular focus on areas such as growing distributions, portfolio growth, diversification and rebalancing, the priorities for the next 12 to 24 months are slightly different.During this time, the Company’s strategy has become more defensive, while still closely aligning to Emira’s purpose.

 

FINANCIAL
OBJECTIVE

› Optimise net income and grow distributions in excess of pre-set targets Target gearing to be limited to 40% of total assets

› Target gearing to be limited to 40% of total assets

 

PORTFOLIO
OBJECTIVE

› Selectively recycle and upgrade assets

› Have a balanced sectoral and geographical exposure

› Dispose of non-core or non-performing properties

› Maintain vacancy level at below national average and manage lease expiry profile

 

STAKEHOLDER
OBJECTIVE

› Increase market capitalisation, liquidity and spread of investors

› Reduce Emira’s environmental impacts

› Improve Emira’s transformation credentials

 

In terms of the overall portfolio, the aim is to preserve, bed down and strengthen the balance sheet that Emira currently has, rather than making major adjustments amid the prevailing uncertainty. It is fortunate that due to the various portfolio interventions implemented by management during previous years, the Fund is better able to safely navigate and manage these unprecedented times.

With the above in mind, the following table sets out Emira’s strategic objectives as they stand, however, 2020 performance and future targets should be viewed in the context of the changing global environment during the year under review.