JSE-listed Emira Property Fund reported distribution growth per participatory inter- est (PI) of 9% for the six months ended December 31, 2014. At a results presentation last month, CEO James Templeton credited the results to the fund’s acquisitions, contractual rental escalations on the bulk of its portfolio, significant leasing progress made during the period and stringent cost control.

In the six months under review, Emira’s net asset value (NAV) increased by 14% year-on-year to R16.50 per PI, while its distributable income increased by 13% year-on-year to R33-million.

“Our investors have shown significant support for Emira, so it is gratifying that they are being rewarded with above-average total returns. Emira’s operational performance is the best it has been in a long time.

“Our like-for-like net property income growth of 8.6% is a fantastic achievement. We’re delivering excellent progress in all key areas of the business and have solid strategies in place to continue this performance,” said Templeton.

He expected Emira to achieve similar levels of distribution growth for the full financial year.

Meanwhile, portfolio vacancies have been reduced over the past two years, from 7.8% in December 2012 to 5.1% in December 2013 and 4.9% in December 2014.

Emira’s 7.9% office sector vacancy remains below the South African Property Owners Association’s national levels of 11.1%, and its tenant retention by gross lettable area improved from 70% to 77% in the comparable period.

In support of distribution growth for shareholders, Emira will add R8-million to its bottom line yearly, owing to debt swaps that concluded in November last year.

The debt swaps, undertaken with several of Emira’s financiers, restructure older debt taken out – dating as far back as 2008 – at higher interest rates, with lower rates over a longer period at a capital cost of R31.8-million. By hedging out its debt, Emira has also lowered its risk, reducing its interest rate exposure by securing lower fixed rates.

“We’ve watched the swap curve for the best opportunities and restructured R429-million of debt, dropping the average rate of our fixed debt book by about 20 basis points. “Emira has a moderate level of gearing with loan to value of 35.4%, and 85.4% of its debt is fixed for a weighted average period of 4.1 years,” said Templeton.

Emira is concluding the beneficial disposals of noncore properties and is reinvesting the capital in upgrades, improvements and acquisitions.

Four properties totalling R93.8-million were sold and transferred at a forward yield of 8.9% and a 12% premium book value. Another five buildings were also sold – collectively worth R535.5-million and are yet to be transferred – at a forward yield of 6.9% and a premium book value of 40.2%.

Emira has about 30 internal capital expenditure projects under way – its largest number yet.

Further, refurbishment and extensions under way in the six months ended December 31, 2014, totalled R819.4-million. The most significant was the R551.3-million major upgrade and extension – from 63 000 m2 to 90 000 m2 – to the Wonderpark shopping centre, in Pretoria, to include extensions for existing national tenants and introduce new anchors, with practical completion achieved in October 2014.

Income from the Emira’s listed investment in Australia increased by 16%, owing to an increase in the distribution per unit received from property investment holding company Growthpoint Properties Australia and the depreciation of the rand against the Australian dollar.