Emira Property Fund delivers another stable interim financial result
mira Property Fund declared an interim dividend of 61.74 cents per share that was 7.1% lower than that declared at the end of December 2022, but the payout was bang on forecasts made at the end of the last financial year, CEO Geoff Jennett said yesterday.
In this context, ”we are okay with it,” he said in an interview. Portfolio metrics had improved across all sectors, reflecting increased stability and “giving us cause for cautious optimism that the market is nearer to bottoming out and may be poised for upside.”
The group also met key strategic targets through the period.
Distributable earnings for six months to September 30 fell to R310.6 million compared to R378.7m for the prior period, primarily because the current period excluded interest income from Inani and the higher yielding Enyuka, which was disposed during the period, together with lower income from Emira’s US investments, and the impact of higher interest rates on debt.
Emira is a diversified Reit. During the period it finalised a scheme of arrangement to acquire all of specialist residential REIT Transcend Property Fund, enlarging its foothold in the defensive residential property sector that now represented 16% of Emira’s local portfolio value.
It also completed the disposal of its holding in the rural and lower-income retail property venture Enyuka Property Fund to co-investor One Property Holdings.
In South Africa, Emira’s 91-property strong portfolio includes commercial – retail, office and industrial – and residential assets valued at R12.1 billion.
The offshore asset base comprises equity investments in 12 grocery-anchored open- air convenience shopping centres in the better-performing economy of the US.
Loan-to-value ratio (LTV) was slightly lower at 41.2% by the end of the period and may increase in the second half due to a post-interim period payment for Transcend’s assets, but further residential unit sales at The Bolton and of the other residential units were expected to reduce LTV further, he said.
Locally, the operating metrics across all sectors had mostly improved, he said.
Operationally, the investments in the US generally performed well, but there had been certain larger tenant failures that had had an adverse impact on the results. Dividend income from the US for the six months was slightly higher than expected, said Jennett.
He said their KPI targets were for distributable income per share of 118.49c for the full financial year, but at this stage they expected they might reach a little below this target.
The balance sheet remained healthy and the weaker rand contributed positively to the value of Emira’s US investments.
He said local and global markets remained uncertain and volatile and when interest rates started to decline, it was expected to be relatively slowly, so Emira remained cautious about the future and would focus on fundamentals and elements within its control.
Emira moved beyond the halfway mark in the sale of its units at The Bolton, where offices were transformed into residential units and fully leased, and had now reached the stage where the best use of this capital was to sell off individual units, at higher prices, on a sectional title basis and reallocate the proceeds to other strategic investments.
Jennett said they had considered other office conversions, but hadn’t yet found another suitable office building that could be converted.
Vacancy in the commercial property portfolio improved from 4.7% to 4.1%, with all sectors outperforming their SA Benchmarks.
The retail portfolio of primarily grocery-anchored neighbourhood centres traded well. Vacancies in the office portfolio of mainly P- and A-grade properties fell from 12.5% to 12%. The industrial portfolio saw vacancies further decrease from 2.1% to 0.6%.