Emira benefits from diversification


Emira benefits from diversification

Published Date: 2019-08-15 | Source: Stephen Gunnion | Author: Stephen Gunnion

Emira benefits from diversification

The real estate investment trust says investments in the US and in residential property have made it more defensive.

Emira Property Fund says it has achieved positive growth over that past year despite difficult local economic conditions. It credits the gain partly on its focus on retaining tenants to maintain low vacancy levels. And while there has been continued downward pressure on rentals across all property sectors, it says the office sector has been particularly vulnerable due to an over-supply of space.

The real estate investment trust (REIT) sold a R1.8 billion portfolio of 25 office properties to Inani Property Fund during the period, reducing its risk to the sector. It said its smaller remaining office portfolio and further investments in the US and in local residential property resulted in more defensive income streams.

The office portfolio disposal resulted in a 2.9% decline in revenue to R1.7 billion in the year to end-June. However, it said its stable portfolio performed well, with like-for-like revenue growth of 5.7%, driven mostly by contractual escalations. Higher expenses as a result of a hike in electricity costs and higher municipal rates left operating profit 9.5% lower at R954 million. Administrative expenses jumped 20% to R123 million, mostly due to incremental administration costs arising from its investments into the US and increased staff costs. While earnings per share (EPS) rose 5.8% to 175.92c, headline EPS declined by 9.4% to 159.51c. It's lifted its final dividend by 3.1% to 78.48c per share.

The fund reported distributable income of R158 million from its investments in the US, as well as in Transcend Residential Property Fund and Enyuka Property Fund.

Its net asset value rose by 1.9% to 1,790.8c per share. At the end of June, overall vacancies of 3.6% were up from 3.4% a year earlier but slightly improved from December's level of 3.7%.

Emira said it would pursue its offshore strategy in a "cautious and conservative manner", ensuring that it acquired the right assets at the right prices. It would also look for accretive opportunities in its home market, such as its recent offer for SA Corporate Real Estate, which was subsequently turned down by its rival.

Its shares rose 1% to R12.63 yesterday.

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