Emira lifts distribution as vacancies fall
The property fund says due to an oversupply of offices it’s had to reduce rentals and provide tenants with more incentives
Emira Property Fund has returned to positive distribution growth after reducing its vacancies by 40% last year. Continuing a trend that emerged in its interim results, the fund has increased its final dividend by 2.5% to 76.15c per share, taking its total distribution of the year to 146.8c. Vacancies continued to reduce, to 3.4% of its portfolio from 5.7% a year ago.
Emira surprised the market in 2017 when it warned of lower dividends due to the tough local market. It said the turnaround was achieved by the concerted efforts of its team. However, it says the ongoing over-supply of offices has necessitated a further reduction in rentals and an increase in tenant incentives for it to remain competitive.
In the year to end-June, revenue declined by 2.6% to R1.7 billion after it sold 13 properties for R531 million during the year and reconsolidated the Enyuka Property Fund. It said its stable portfolio performed well, with like-for-like growth of 7.5%. The disposals resulted in a 3.7% fall in property expenses. However, its stable portfolio grew expenses by 8.2%.
Income from its stake in Growthpoint Australia decreased by 5.9% to R55 million. While the underlying net distribution in Australian dollars increased by 2.9%, this was more than offset by a large increase in the related dividend withholding tax.
Distributable income of R94.6 million from equity-accounted investments includes income of R72 million from Enyuka and from the investments it’s made into the US.
Emira said it planned to continue to reduce its local office exposures. At the end of June, it had earmarked 26 properties worth R1.9 billion for disposal, of which R1.8 billion are office properties.
“Factoring in the current and expected market conditions for the year ahead, vacancy profiles and expected rental reversions, as well as anticipated opportunities, our target is to further improve on the dividend growth achieved for the current year,” Emira said.