Octodec prepares for lower second-half payout


Octodec prepares for lower second-half payout

Published Date: 2019-05-14 | Source: Stephen Gunnion | Author: Stephen Gunnion

Octodec prepares for lower second-half payout

The real estate investment trust says its payout has been affected by pressure on rental income growth and rising operating costs.

Octodec Investments has maintained its interim dividend at 101.7c following a tough period for the sector as political and policy uncertainty weighed on consumer confidence ahead of last week's elections. It says its payout was impacted by pressure on rental income growth as well as an increase in property operating costs. And it expects its second-half dividend to be slightly lower, resulting in a decrease of about 2% in its full-year dividend.

The real estate investment trust (REIT) has a portfolio of 293 properties worth R13 billion. Two-thirds of its portfolio is in Tshwane and the other third in Johannesburg and it says it is well positioned to take advantage of opportunities in their CBDs.

Rental income grew by 5.2% to R978 million in the six months to end-February, boosted by Sharon's Place in Pretoria, which is almost fully let with Shoprite and Clicks as anchor tenants. Gerlan Properties and Jardtal Properties are also now accounted for as subsidiaries after it bought the remaining 50% stake in the two businesses during the period.

Net property income rose 1.6% to R527 million and distributable profit increased by 1% to R273 million. Its loan to investment value rose marginally to 38.3% over the period from 37.8% a year earlier. Its net asset value per share declined 1.6% to R29.16.

The lower growth in rental income for retail shops, shopping centres, offices and auto dealerships was mainly attributable to increased vacancies during the period as well as rental reversions, a result of the poor economic environment. Residential rental income increased by 3.9%, with stable occupancy levels and a greater focus on tenant retention.

Its shares closed 1.3% up at R19.75.

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