The first half of JSE-listed real estate investment trust (Reit) Emira Property Fund’s 2017 financial year was defined by an intense strategic focus on rebalancing its portfolio out of the office sector, aggressive leasing and tenant retention, vigilant cost control, prudent financial management and identifying new opportunities.
During the six months to December 31, Emira sold and transferred two properties for R130.2-million at a combined premium to book value of 26.7%.
It has committed to selling a further 19 properties valued at R917.1-million.
Unconditional sales of R381.2-million have already been concluded and the properties are expected to transfer before June.
CEO Geoff Jennett on Wednesday said the funds raised through the disposals will be put to best use and that Emira is assessing its properties for potential upgrades, refurbishments, extension or even conversions to different uses, including residential.
“We want to put every asset to its highest use. Emira will continue to invest in projects that modernise, extend and redevelop our assets to enhance their values and competitiveness and extract value from existing bulk,” he noted.
Where the best use of the asset is residential, the Reit will convert office space to residential space.
Currently, Emira is completing the redevelopment of Knightsbridge, creating 30 000 m2 of office space in what will be the only P-grade green-certified office park in Bryanston, Johannesburg.
The phased project has already secured tenants WSP|Parsons Brinckerhoff for 5 900 m2 of space and KFC and Pizza Hut’s African head office for 3 150 m2 of space.
Emira joined forces with retail property specialists ONE Property Holdings to form the specialised Enyuka Property Fund, which came into effect in January.
Enyuka started out with Emira’s R575-million portfolio of 15 retail properties, and a war chest for immediate acquisitions and developments up to a further R625-million.
It has a current pipeline of R400-million of similar assets and further acquisition opportunities of up to R500-million.
“With Enyuka, Emira will receive the same returns from these retail properties as we would if the properties had remained in the portfolio, plus we will benefit from a share of any excess income above a benchmark,” Jennett explained.
He added that the company would also benefit from the acquisition of new assets and enjoy meaningful participation in an actively managed and growing base of rural retail assets.
Meanwhile, favouring the offshore exposure it gets from its investment in Growthpoint Properties Australia (GOZ), Emira recently used its rights to acquire a further 1.33-million GOZ shares.
It now holds 4.9% of GOZ’s shares in issue, valued at R924.2-million.
Emira’s income from GOZ grew by 1.7% in the six months to December 31, with the stronger rand against the Australian dollar largely offsetting distribution growth.
Emira continues to enjoy good access to funding and, during the period, concluded a new R300-million four-year secured facility with Standard Bank.
Its gearing remains a conservative 37.8%, with 84% of its debt fixed for a weighted average of 2.9 years.
It also completed a share buyback programme of 14-million Emira shares that benefits from the divergence between its equity value on the stock exchange and its net asset value (NAV).
“We have great confidence in Emira’s prospects relative to its share price and believe it is an opportune time for share buybacks,” Jennett noted.
Emira’s NAV increased by 1.4% during the six months under review.