Octodec MD Jeffrey Wapnick
JSE-listed real estate investment trust Octodec on Monday posted a 9.3% rise in total distribution to 96.8c a share as it presented its first interim financial results as an expanded company after merging with Premium Properties.
The merger with Premium, contractual escalations, improved letting and an increase in the recovery of utility and assessment rate charges had boosted the group’s revenue to R808-million for the six months to February 28, from R269.2-million in the corresponding period in the prior year.
The company’s profit increased from R105-million in the first half of 2014 to R762-million for the first half of 2015, while basic earnings a share surged 242.4% to 322.5c in the interim period under review.
“The impressive results show strong growth in earnings with rental income increasing following a number of successful property upgrades and a proactive approach to letting,” MD Jeffrey Wapnick said.
During the period under review, Octodec spent R151.8-million of the R653.3-million allocated for four major construction projects.
One such project was the R129.3-million redevelopment of Bosman Place, in the Johannesburg central business district (CDB), which would be completed in May. The 225 converted residential units, with a retail component, would allow a fully let initial yield of 8.1%.
Progress had also been made on the R326.9-million Centre Forum greenfield residential development, which, when completed in late 2016, would unlock a fully let yield of 8.1% for Octodec.
The project comprised 400 units, ground floor retail and parking adjacent to the Tshwane House municipal development, in the Tshwane CBD.
Meanwhile, the R140.4-million greenfield mixed-use development, 1 on Mutual, comprising 142 residential units, ground floor retail space and parking located next to Church Square in the Tshwane CBD, would be completed early next year. Octodec expected a fully let yield of 7.6%.
Further, Octodec expected to complete its R56.7-million second-phase retail redevelopment at Silver Place, in Silverton, Tshwane, in July, with a fully let yield of 8% expected from this project.
“Value creation through strategic developments is core to our business and the merger has enabled us to take on much larger scale developments at attractive yields,” said Wapnick.
Meanwhile, Octodec injected R70.6-million into the acquisitions of several properties, including the R33.5-million Reinsurance House, in the Johannesburg CBD, during first half of the year. The company aimed to convert the current office block into 175 residential units at a cost of R68.3-million with an estimated fully let yield of 8.5%.
Octodec also shed three properties for R15.9-million.
“Looking ahead, our active management of the portfolio and development pipeline will continue to enhance the quality of the portfolio, sustain dividends and support continued value growth in spite of a subdued local economy. We remain on track to grow dividends per share by between 8% and 9% for the full year,” Wapnick concluded.