JSE-listed real estate investment trust (Reit) Octodec Investments has increased its revenue by 2.1% year-on-year to R1.08-billion for the six months ended February 28, while its distributable income a share rose by 11.1% year-on-year to 92.6c a share.

The group has also increased its dividend by 4% to 64.5c a share, supported by strong rental collections of 98.5% and an improvement in core vacancies to 13.1% from 13.7% previously.

During the six-month period under review, Octodec disposed of ten noncore properties for R89-million and reduced its loan-to-value (LTV) ratio to 37.3%.

Further, Octodec has upgraded its guidance for the full financial year, expecting distributable income and distributions to grow by between 3% and 5%.

The group remains constructive on its outlook, supported by improving macroeconomic conditions, continued demand for affordable and well-located space and a clear pipeline of strategic initiatives.

Octodec delivered double-digit growth in distributable income, supported by improved funding costs, strategic asset sales, stable property income and continued leasing momentum across key segments.

“We are seeing the benefits of a focused strategy coming through in our results. The business is becoming more streamlined, more efficient, and better positioned for growth as we actively reshape the portfolio and redeploy capital,” Octodec CEO Jeffrey Wapnick says.

Operationally, the group’s portfolio continues to perform steadily as rental collections remained strong at 98.5%, reflecting consistent tenant engagement and cash flow stability, while vacancies trended down, particularly with the residential portfolio.

Performance across the core asset base remained stable despite a mixed operating environment and, within the portfolio, the residential category remains a key contributor, supported by sustained demand for well-located, affordable accommodation.

Rental income increased by 5.5% during the period, vacancies reduced to 7.7% and the like-for-like rental growth of 5.7% reflects improved occupancy levels, steady rental escalations and targeted asset enhancements.

“Demand for well-located, cost-effective accommodation remains a key underpin of our performance, particularly in our core Tshwane portfolio,” Wapnick adds.

The retail portfolio showed encouraging signs of stabilisation, with street retail performance beginning to recover in key nodes, including Johannesburg, supported by improving footfall and trading conditions.

Shopping centres delivered like-for-like growth of 7.7% with the portfolio, excluding Killarney Mall in Johannesburg, effectively fully let.

The office portfolio remained broadly stable, with management continuing to assess select assets for potential disposal or conversion and this forms part of a broader approach to unlocking value through repositioning and repurposing.

Meanwhile, the industrial portfolio delivered steady growth, with rental income increasing by 6.8%, supported by continued demand for smaller warehouse and mini-industrial space.

Octodec continued to make meaningful progress in reshaping its portfolio through an active disposal and reinvestment programme and, during the six-month period ended February 28, the group disposed of ten noncore properties for R88.7-million, while also announcing the disposal of Killarney Mall for R397.5-million, subject to conditions. This decision is consistent with the group’s plan for the continued disposal of noncore Johannesburg central business district (CBD) assets.

These transactions form part of a broader initiative to reduce the Group’s exposure to smaller, noncore and underperforming assets, while redirecting capital into larger, higher-quality opportunities with stronger income potential and scalability.

“We are making steady progress in reducing the long tail of smaller assets and concentrating the portfolio around properties that offer scale, stronger income profiles, and long-term relevance,” says Octodec deputy CEO and CFO Riaan Erasmus.

Refinancing during this period was achieved at more favourable margins and tenor, contributing to improved funding efficiency.

Meanwhile, the Yethu City development in Pretoria continued to demonstrate strong demand and operational success, as the development was fully let within three-and-a-half months of launch and has maintained near to full occupancy.

Octodec is actively progressing opportunities to expand the Yethu City concept and the group has identified a pipeline of potential conversion opportunities within its existing portfolio and is engaging with funding and development partners to support the future rollout. Ongoing feasibility work continues to support the scalability of the model.

“As we streamline the portfolio, we are creating capacity to reinvest into scalable formats that align with structural demand in the urban housing market,” Erasmus says.

Looking ahead, Octodec’s medium-term focus remains on further simplifying the portfolio, accelerating disposals, and reallocating capital into higher-quality, scalable assets, while increasing exposure to defensive, high-demand sectors and improving earnings quality over time.

“Execution is increasingly visible in the shape of the portfolio and the quality of the earnings. We are encouraged by the momentum in the business and the opportunities ahead. With a clearer, more focused portfolio, we believe Octodec is well positioned to build on this trajectory,” Wapnick says.

The group stresses that many operational improvements made over the past six months are not yet fully reflected in the interim results as it expects stronger momentum in the second half.