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Emira Property Fund trading well through a challenging environment

EMIRA Property Fund reported strong operational results, and a final dividend of 30.35 cents per share took the dividend for the nine months to March 31 to 96.78c, CEO Geoff Jennett said yesterday the asset Value per share increased by 4.2% to 1696.60c per share. Jennett said in an online presentation that while the nine month period could not be compared to either the prior or coming 12 month financial years, because of a change of year end, the company was in good shape.

He said the decision to change the year-end was because it needed to align the financial reporting with majority shareholder Castleview and with that of Transcend Property Fund, which it gained control of in October 2022. ”Both our SA anti US portfolios delivered pleasing operational performances.

The results extend Emira’s track record of reliable performance, and our leasing success and lower vacancies indicate an attractive and sustainable portfolio” he said.

The annual report cites a financial 2024 distributable income per share target for executives of 118.49c per share. In the past nine months, the distributable income per share came to 106.766c.

Some factors still to come were the effects of the high interest rates, the effects of load shedding on Emira, its tenants and their customers, the dilutionary impact of the disposal of the high yielding Enyuka Property Fund asset, and no more accrual of income from lnani Property Holdings. In the past nine months, Emira made strides in strategic capital recycling. It gained control of specialist res-idential real estate investment trust Transcend, and boosted its exposure to the defensive residential property sector.

It also prepared to transfer its holding in retail property venture Enyuka to co-investor One Property Holdings. ”We remain focused on fundamentals and managing the elements within our control.

As a diversied fund, Emira has several levers at our disposal, all of which are working well to ensure we are stable, have lower risk and attractive to the market,” Jennett said. In South Africa, the portfolio includes commercial 2 retail, office and industrial — and residential assets. Eighteen percent of the asset base was made up of equity investments in 12 grocery-anchored open—air convenience shopping centres in the US. investing with US-based partner The Rainier Companies More generally, Jennett said all JSE listed property companies, if they were not sufficiently diversified offshore, were likely to face lower income this year due to the impact of high interest rates and of load shedding. Emira’s portfolio composition changed markedly. The Transcend consolidation saw Emira’s directly held portfolio increase from 74 assets to 94 worth R121 billion. Residential rental assets increased from one to 23 properties — 20% of Emira’s directly held SA portfolio. Emira also gained direct access to residential assets in Cape ‘Town for the first time.

The portfolio comes to 4 315 units split between Gauteng’s (85% by value) and Cape Town’s (15%) high-demand areas. With a 2.6% Vacancy and slow but steady rental growth, the group expected the portfolio would contribute consistently to Emira’s revenue, said Jennett. The direct commercial portfolio is split between urban retail (41% of directly held SA portfolio Value), office (24%) and industrial (15%).

Vacancies improved from 5.3% to 47% over nine months, and were well below the applicable benchmarks. Rental collections were 101.6%. The 17-property retail portfolio of primarily grocery-anchored neighbourhood centres was trading well despite headwinds for retailers and shoppers alike. The industrial portfolio of 34 properties saw a stable and defensive performance. Vacancies decreased from 2.7% to 2.1%. Office vacancies fell from 15% to 12.5%. The commercial portfolio benefited from R1465 million in upgrades, many focused on energy efficiency, solar plants and installing back-up power.

Around 79% of gross Iettable area in the commercial portfolio has full back-up power, including tenant generators. Emira’s diesel costs for the nine months came to R27m from R4.9m in the prior 12 months. In the US, the gradual positive growth in the economy and low unemployment (35%) supported the investment in US open-air centres with a high-quality tenant base focused on popular Value retail and essential goods and services. US portfolio vacancies were reduced from 4.5% to 2.6%.

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