JSE-listed Emira Property Fund on Wednesday reported a solid performance for the year ended June 30, with distribution growth per share up 8.8% to 146.10c apiece.

The fund attributed the growth to contractual escalations across most of its portfolio, benchmark-surpassing occupancy levels, tight cost controls, effective recycling of capital and Emira’s strong balance sheet. The fund also retained 75% of its tenants.

CHANGING FACE
Emira COO Ulana van Biljon said at the fund’s results presentation, in Johannesburg, that there was a perception that the real estate investment trust (Reit) only traded in B- and C-grade properties.

However, she noted that, over the last five years, the fund’s portfolio had changed from 30% B- and C-grade properties in 2011, to 32% A- and P-grade properties this year.

The medium-cap diversified Reit owns 144 properties, valued at R12.9-billion, a 1.8% increase from the prior year.

The Reit is also adding to its portfolio. One such project is the development of the P-grade Summit Place office building in Menlyn, Pretoria, with a gross lettable area of 15 239 m².

The R403.5-million development is expected to be completed by September 17, with ten new buildings in the complex. Van Biljon likened the node to Sandton. “We regard Menlyn as the Sandton of Pretoria,” she quipped.

The fund now planned to spend almost R2-billion on 12 projects in its pipeline. Currently, the fund’s portfolio comprised 44% office space, with plans to increase this to 50% in the next five years.

Emira also diversified internationally through its direct interest in ASX-listed Growthpoint Properties Australia, valued at R940.4-million. However, Emira CEO Geoff Jennett pointed out that this would be where its international investment stops.

“We have previously looked at investing in offshore Reits, but given the volatility of the rand, Brexit and our renewed focus on our local portfolio, we will not progress with that strategy,” he said, adding that 93% of its assets were currently based in South Africa.

VACANCIES
Meanwhile, the property fund forecast negative growth of 2% in distribution a share for the 2017 financial year, owing to increased vacancies in the office portfolio, from 7.8% to 10.5%.

Despite good leasing numbers, the fund was hit with 30 000 m² of sudden vacancies in eight office buildings, five of which were in Pretoria. This brought the total up to 5.3% in vacancies.

Van Biljon explained that the fund is currently engaged in a number of talks to fill these vacancies, including being shortlisted for an office space tender for one of the national departments.

“We are very pleased that we were able to keep our vacancies stable over the last few years,” she added.