Unaudited interim financial results for six months to 31 December 2015 and dividend distribution declaration
Emira Property Fund Limited (Incorporated in the Republic of South Africa) Registration number: 2014/130842/06 Share code: EMI ISIN: ZAE000203063 (“Emira” or “the Fund” or “the Company”) Tax number: 9995/739/15/9 (Approved as a REIT by the JSE)
Unaudited interim financial results For six months to 31 December 2015 and dividend distribution declaration
Growth in distributions +8,8% Distribution per share 70,34c Net asset per value share 1 801c Fixed debt 84,9%
Commentary The Emira board of directors is pleased to announce that a dividend of 70,34 cents per share has been declared for the six months to 31 December 2015. This is an increase of 8,8% on the previous comparable period and in line with expectations.
Vacancies and tenant renewals Vacancies have decreased from 5,1% (December 2013) to 4,9% (December 2014) to 4,7% (December 2015) over the past two years. The steady level of low vacancies is the result of focussed leasing in the office sector, retaining tenants within the portfolio as well as the strategic sale of properties such as Braamfontein Centre in Braamfontein and 122 Pybus Road in Sandton. The industrial sector vacancy of 1,7% remains substantially lower than the latest SAPOA national levels of 4,0% with a 0% vacancy recorded across the Cape Town and Durban regions. Similarly, the office sector vacancy of 9,3% and retail sector vacancy of 3,0% remain below SAPOA national levels of 10,5% and 5,3% respectively.
A total of 82% by GLA (or 82% by revenue) of expiring tenants were renewed during the six months to December 2015.
Major leases concluded The largest new leases concluded were at Technohub in Midrand (2 753m²), Universal Industrial Park in Durban (1 242m²) and Industrial Village Kya Sands (1 062m²). The largest renewals were Defy at the Defy Appliances building in Denver (10 100m²), Salga at Menlyn Corporate Park in Menlyn (5 939m²) and Spoor and Fisher at Highgrove Office Park in Centurion (5 814m²).
Acquisitions Acquisitions during the period comprised (i) a 50% undivided share in Mitchells Plain Shopping Centre in the Western Cape for a purchase price of R75,3m at an initial yield of 9,3% and (ii) a 50% undivided share in five buildings comprising Summit Place, the P-grade commercial development in Menlyn, Pretoria, for an amount of R403,0m at an average yield of 8,14%. Summit Place 1 and Summit Place 2, being the two completed office buildings in the Summit Place development, transferred in December 2015 at a cost of R86,4m. The balance of Summit Place, which comprises both office and retail space, will be developed by Emira and its partners with a final completion date of January 2017. By 31 December 2015, R110,0m had been paid for the land and development costs to date for Summit Place 3 and Summit Place 4.
Disposals The transfer of Brandwag Shopping Centre and Kosmos Woonstelle was concluded in September 2015. The property was sold at a sizeable premium to book value at a forward yield of 6,5%.
Four non-core buildings with a total disposal value of R171,5m, representing a forward yield of 10,8% and a discount to book value of 5,2%, were sold at 31 December 2015 but have yet to be transferred.
The successful execution of the Fund’s disposal strategy is nearing completion with very few non-core properties remaining on its disposals list.
Refurbishments and extensions Projects to modernise, extend and redevelop 13 buildings totalling approximately R515,1m, are currently underway, the most significant of which are the redevelopment of Knightsbridge Manor office park in Bryanston and the upgrade and refurbishment of Kramerville Corner in Marlboro.
The first phase of the redevelopment of the prime located Knightsbridge Manor office park in Bryanston commenced in November 2015 and on final completion the development will offer 29 352m² of prime P-grade office space. The R795m project is being undertaken in three phases, with the first of seven new buildings set to be complete in May 2017 at a cost of R368m with 50% pre-let. The new office park will boast a minimum 4-Star Green Star SA rating from the Green Building Council South Africa.
The R69,4m upgrade and refurbishment of Kramerville Corner is expected to be completed by the end of March 2016.
The number of projects underway reflects the Fund’s strategy to continually upgrade the portfolio and extract value from existing bulk.
Gearing Despite liquidity in the debt capital markets remaining tight, Emira continued to successfully access funding at competitive rates.
Funding activities during the six month period included:
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