Emira cushioned by offshore expansion


Emira cushioned by offshore expansion

Published Date: 2020-02-20 | Source: Stephen Gunnion | Author: Stephen Gunnion

Emira cushioned by offshore expansion

The property fund has rebalanced its portfolio over the past three years, including a bet on US retail property.

Emira Property Fund says steps taken in recent years to rebalance its portfolio and invest offshore helped it increase its interim dividend despite the constrained local economy. It's also made a concerted effort to hold onto its tenants.

Emira's portfolio is 90% exposed to SA, with 81% invested in direct property and 9% indirectly. The remainder is invested in offshore indirect property. More than half its income from equity-accounted investments of R108 million for the six months to December came from its nine property investments in the US, where it has co-invested in nine grocery-anchored retail centres with US-based partner The Rainier Companies. Over the period, it also realised a foreign exchange gain of R2.2 million compared to a loss of R500,000 the previous period due to a strengthening of the dollar against the rand. Income from its listed investment in Growthpoint Australia fell 43% to R15.3 million after it sold some of its units.

Revenue for the six months declined by 12% to R771 million due to the disposal of a portfolio of office properties to Inani Property Fund for R1.8 billion last year. Its static portfolio grew like-for-like revenue by 6.6%, supported by contractual escalations and lower vacancies. Although the disposal to Inani resulted in a 6.9% decrease in property expenses, on its static profile they jumped 12.5% on a like-for-like basis due to escalating electricity and municipal costs. It said it continued to invest in alternative energy sources and initiatives to reduce electricity and water consumption. Its gross cost-to-income ratio rose to 39.2% from 37.3%.

Vacancies fell to 3% from 3.7% a year earlier due to letting activity at some of its industrial parks. Office sector vacancies improved to 4.6% from 5.6% following a number of property disposals, while urban retail vacancies rose to 2.4% from 2%. Its sole directly held residential property, The Bolton, was completed last May and was 93.6% let by the end of December.

For the period, earnings per share (EPS) declined by 21% to 77.77c and headline EPS ended 17% lower at 85.34c. It raised its interim dividend by 1.7% to 74.1c per share.

Emira said the proceeds from the sale of its Growthpoint Australia units and the office disposal to Inani were used to permanently reduce debt, which declined to R4.9 billion. It expects to trade out of the remaining Growthpoint Australia shares by the end of June as the holding is non-core. Its remaining investment was worth R234 million at the end of December.

Its shares fell 0.3% to R12.30 yesterday.

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