CEO James Templeton
Emira Property Fund on Wednesday reported distribution growth to investors of 6.5% for its six-month period to December 31, which CEO James Templeton attributed to successful strategies that had resulted in significant progress across all key metrics.
“Emira has done well in a tough market to deliver real growth for investors and meet forecasts. Portfolio vacancies reduced to 5.1%, tenant retention is up at 70%, rental reversions are looking better and cost controls continue to yield benefits. This all contributed positively to results,” he commented.
Emira, which had a market capitalisation of R6.3-billion, posted an 8.7% growth in net asset value in 2013.
Templeton further asserted that Emira was “on track” to deliver similar growth for its full financial year despite subdued economic growth, saying that the fund’s performance would continue to be driven by top-line growth from improved vacancies, rental escalations and income from its investment in ASX-listed Growthpoint Properties Australia.
“We will also benefit from the tight cost controls in place, including savings from the property management tender and our proactive interest-rate management,” he said.
The JSE-listed fund owned a diversified portfolio of office, retail and industrial properties. Its assets comprised 141 properties valued at R9.7-billion and listed investments of R626-million.
During the half-year, Emira’s vacancies improved from 5.6% to 5.1%, driven by substantial letting across all sectors.
This included 27 leases and renewals of over 2 000 m2 each, accounting for 103 000 m2 with a value of R400-million and an average duration of five years.
“We made further good progress improving the quality of our property portfolio with strategic acquisitions, disposals, refurbishments and extensions,” said Templeton.
Emira disposed of six noncore properties for R329-million and acquired a fully let industrial building in Cape Town as well as an industrial site for development in Pretoria.
With acquisition opportunities scarce for the listed property sector, Templeton said the company had no interest in growing for growth's sake.
“Any transaction we consider has to enhance income and distributions,” he said.
Emira reported that it had R603-million worth of refurbishment and extension projects under development, the most significant of which was the R513-million upgrade and extension of Wonderpark Shopping Centre, its biggest asset.
The centre was being enlarged from 63 000 m2 to 90 000 m2 to accommodate expansions for existing national tenants including Game, Woolworths, Jet and Edgars.
Office space comprised just less than half of Emira’s diversified property portfolio by value, at 47%.
Templeton added that, like-for-like, net income from Emira’s office portfolio was substantially up by 6.4% from a like-for-like decline last year.
“This is an exceptional result from the office portfolio, but it was still beaten by the 7.5% year-on-year growth from our retail portfolio, illustrating the benefits of a diversified portfolio.
“Net income from the entire portfolio grew by 4.5% year-on-year. Emira’s focused approach to letting space and tenant retention is showing in the numbers and we will continue to refine our entire portfolio to maximise its performance,” he commented.
Emira closed the half-year period with a 30.6% loan-to-value ratio. Some 76% of its debt was fixed at a weighted duration of five years and nine months at an all-in weighted average interest rate of 8.5%.
It also continued to take advantage of lower rates of funding available on debt capital markets during the period.
“By aiming for revenue enhancing opportunities which further Emira’s strategies and increasing our portfolio and its assets, we will continue to provide sustainable and growing income for investors,” said Templeton.