JSE-listed Emira Property Fund on Wednesday reported distributions per participatory interest (PI) of 134.27c – a distribution growth of 9% – for the 12 months to June 30.
Emira’s net asset value increased by 15.9% to R17.51/PI and it achieved a distributable income growth of 14% to R685.5-million.
CEO James Templeton, who would step down at the end of the month, said the increase in distribution was the result of the fund’s acquisitive growth, the contractual rental escalations on most of its portfolio, improved leasing and rigorous cost controls, as well as increased recoveries of municipal expenses. “Strong performance across all metrics underpins Emira’s positive performance. We notched up excellent top-line growth and kept expenses well-contained. Our vacancy levels are better than all the industry benchmarks, driven by good leasing performance,” he stated. Vacancies decreased from 5.6% in June 2013 to 4.5% last year and to 4% in the year under review. This represented a decline in overall vacancies of 16 225 m2 since June 2013, driven by leasing in the office sector, as well as strategic sales of certain properties. Emira’s 7.8% office sector vacancy remained below the South African Property Owners Association (Sapoa) national levels of 10.6%, while its retail vacancy of 2.8% and its industrial vacancy of 1.4% were also better than the national levels reported by Sapoa and Investment Property Databank. The fund achieved tenant retention of 76% by gross lettable area. Emira reported a loan-to-value ratio of 33.4%, and 84.6% of its interest rate exposure was fixed for a weighted average of 3.6 years. The fund was also efficiently recycling its capital by concluding beneficial disposals of noncore properties and reinvesting the proceeds in upgrades, improvements and acquisitions. It had also established a development pipeline of over R2-billion to support its strategic growth. ACQUISITIONS Emira acquired consulting company Integri-T’s R830-million diversified portfolio of eight properties during the year. It also acquired a 60% undivided share in Ben Fleur Boulevard, in eMalahleni, Mpumalanga, for R66.5- million. Further, the fund acquired a 50% undivided share in the Mitchell’s Plain Shopping Centre in the Western Cape for R76-million. Subsequent to year-end, Emira agreed to take a 50% undivided share in five prime-grade office and retail buildings forming part of the Summit Place mixed-use development in Menlyn, Pretoria, for R403-million, subject to approvals. Emira continued its strategy to dispose of noncore buildings, selling and transferring eight properties totalling R361.5-million at a forward yield of 7.1% and a 20% premium to book value. It also disposed of four buildings, yet to transfer, with a total disposal value of R321-million representing a forward yield of 6.9% and a premium to book value of 47%. The sale proceeds will be reinvested in new acquisitions, capital expenditure projects or used to repay debt, all of which will enhance earnings for its investors. “Emira is in a strong position to continue to create value for investors. Our attentive debt management, recycling of capital, latest acquisitions, offshore holdings, development pipeline and ongoing operational focus will continue to be strong drivers of performance,” said Templeton. Emira CFO Geoff Jennett would succeed Templeton as CEO from September 1, with the search for a new CFO already under way.