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Emira achieves solid interim performance with growth in distributable income

15th February 2023

By: Tasneem Bulbulia

Senior Contributing Editor Online


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JSE-listed Emira Property Fund achieved a solid performance for the six months ended December 31, with a 17.4% increase in its cash-backed dividend of 66.43c apiece and growth in distributable income per share of 15% year-on-year.

The company’s net asset value per share increased by 4.1% to 1 694.60c apiece.

CEO Geoff Jennett attributes these “solid results” to the company’s diversified portfolio and stable balance sheet, with it continuing to take incremental steps in its strategic delivery, unlocking the best value from investments.

He also highlights the post-pandemic recovery in Emira’s US equity investments and lower South African portfolio vacancies, below 5% at 4.8%.

“As a stable, low-risk yet very active business with all its diversified parts working well, our higher-than-expected income and solid results extend Emira’s consistent track record of reliable performance.

“Our US portfolio delivered particularly pleasing outcomes during the period, confirming it has resurged from the effects of the Covid-19 pandemic that were still evident in the prior interim period. Further, in a challenging South African environment, Emira continued to reinvest in our assets, ensuring they are attractive and sustainable. The results can be seen in our leasing success and lower vacancies,” Jennet highlights.

Emira’s diversified portfolio is said to be balanced to deliver stability and sustainability through different cycles, comprising a mix of retail, office, industrial and residential assets.

Investing with US-based partner The Rainier Companies, 18% of Emira’s asset base is made up of equity investments in 12 grocery-anchored open-air convenience shopping centres in the US, whose strong economy is noted to provide a buffer to current global uncertainty and the low-growth domestic environment.

Strategically recycling capital, Emira advanced transactions for its two major indirect investments in South Africa during the period. Retail property venture Enyuka Property Fund is in the process of being sold to co-investor One Property Holdings.

Jennet says a few things are outstanding for the sale but that Emira is confident this will be finalised within the next few months.

Emira also obtained control of the specialist residential real estate investment trust (Reit) Transcend Property Fund and consolidated it in October 2022, boosting its exposure to the defensive residential property sector.

As a result of the Transcend transaction, Emira’s directly held portfolio increased from 74 assets to 97 worth R12.1-billion, and it grew its direct residential assets from a single building, The Bolton in Rosebank, Johannesburg, to 24 properties, or 16% of its total investments.

Emira’s direct commercial portfolio continued to benefit from diversification. It improved its vacancy rate from 5.3% to 4.8% in the six months and improved rental reversions on both renewals and new leases.

The Reit’s industrial and retail portfolios performed well. Its retail portfolio of primarily grocery-anchored neighbourhood centres showed improved trading and higher turnover from retailers. Its diversified industrial portfolio delivered marginal improvements in all metrics and remained stable, which Emira says was surprising given the increased rolling power cuts.

A 3.4% improvement in office vacancies to 11.6% led to a strong showing from its portfolio of mainly P- and A-grade properties, albeit off a low base.

“While the office sector seems to have stabilised, its fundamentals remain depressed,” notes Jennett. Emira’s office vacancies outperformed the South African Property Owners Association’s average of 16.1%.

Emira’s commercial portfolio achieved a tenant retention rate of just below 80%, an unchanged weighted average lease expiry of 2.7 years and increased monthly collections to 102.2% of rent billed.

Property expenses were reduced and various solar projects contributed to lower electricity costs at related buildings.

Prioritising carbon emissions reductions, Emira steadily increased renewable energy generation; undertook various energy management and efficiency initiatives; and installed backup power at five more properties to help tenants manage the impacts of loadshedding.

In the US, Emira’s 12 equity investments now total R2.5-billion.

In 2022, the US recorded total real gross domestic product growth of 2.1%, which was 3.2% and 2.9% in the third and fourth quarters, respectively. Considering the ongoing growth in the economy, and consistently low unemployment rates below 4%, the environment remains supportive of Emira’s investment thesis for its US strategy, it highlights.

US portfolio vacancies nearly halved from 4.5% to 2.5%, and the portfolio had better-than-anticipated performance to add R117.8-million to Emira’s distributable income.

Emira’s loan-to-value ratio moved to 43.1%, which remains comfortably within its covenant levels, after using debt funding to gain favourable control of Transcend. It has a more than adequate 2.6x interest cover ratio, unused debt facilities of R486.2-million and cash-on-hand of R142.3-million.

Looking ahead, Jennet says the local and global economy will continue to face challenges, with the former especially impacted by power shortages.

However, he avers that owing to the diversified nature of Emira, and its continuous drive to create value, it would be in a position to continue to deliver stable results, despite challenges, as it did during the pandemic.

Jennet informs that Emira’s change in year-end to March 31, to align with the financial year of its majority shareholder, will see its full-year 2023 final results representing nine months instead of twelve. It will declare a final distribution for the three months ending March 31. 

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online



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