JSE-listed real estate investment trust Octodec Investments announced a satisfactory set of results for the six months ended February 29, against a rapidly degrading environment.

The company reported lower distributable earnings of 97c apiece, compared with 101.7c apiece in the six months ended February 28, 2019, and opted not to declare a dividend to help preserve the company’s cash position during the current uncertain circumstances.

MD Jeffrey Wapnick says future payout ratios will largely depend on the extent of the impact of Covid-19 and the macroeconomy on Octodec’s capital requirements, proceeds from the sale of investment property, liquidity and the need to strengthen the balance sheet.

Meanwhile, Octodec’s total rental income grew by nearly R30-million, or 3% year-on-year, to R1-billion, with like-for-like rental income growth of 2.2% for the core portfolio.

The company is focusing its efforts on maintaining and carrying out smaller upgrades of older properties, instead of undertaking new developments for the time being.

During the six months under review, Octodec sold nine noncore assets for R145-million of which five transferred in the period under review.

The company notes that occupancy levels were stable during the period, with total and core vacancies of 17.9% and 11.7%, respectively.

Reduced vacancies were achieved across all of the commercial sectors, with the most notable being in the industrial and shopping centre portfolios on the back of recent successful refurbishments which attracted new tenants or higher rentals.

Occupancy levels in the residential sector, which were impacted on by reduced tenant affordability and increased competition in the Johannesburg central business district, are a key focus with various value-adding marketing initiatives introduced to improve uptake in the later part of the first half.

Wapnick states that the company is satisfied with the group’s reasonable performance given the recessionary environment and difficult trading conditions.

“Some pleasing progress was made towards certain strategic objectives that were set for the period; particularly the reduction of commercial vacancies, the completion of value-enhancing smaller upgrades, recycling of capital through the sale of noncore or underperforming assets, and successful negotiations for the signing of our government leases, with 18 concluded just post period end,” he adds.

Octodec has cash resources and undrawn banking facilities of R600-million to weather Covid-19 impacts.