Emira continues to reduce office exposure

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Emira continues to reduce office exposure

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Published Date: 2017-08-17 | Source: Stephen Gunnion | Author: stephen Gunnion

Emira continues to reduce office exposure

Emira says office sector has been hurt by the weak economy

Emira Property Fund says solid performances from its portfolio of industrial and retail properties have helped cushion weaker conditions in the office sector. The real estate investment trust says an over supply of office space has forced the market to become more competitive and innovative when trying to attract and retain tenants. They are doing this by cutting rentals and offering other incentives.

Trading conditions are tough in other sectors to due to the weak economy, but the property fund says its vacancies remain stable and below the national average at 5.7%, from 5.3% last year. It says it's been largely unaffected by the departure of international brands and held no exposure to Stuttafords, which closed its last set of doors at the beginning of the month. Urban and rural retail sector vacancies sit at 3.1% and 3.6% respectively, while office sector vacancies have increased to 12.5% from 10.5% last year. 

Emira's revenue rose 0.8% to R1.8 billion in the year to end June. Contractual escalations on its core portfolio of properties were offset by vacancies, rent reversions and the effect of the disposal of 11 properties during the year. It says it's made progress with the letting of vacant space, the benefits of which should be seen this year. It's declared a final dividend of 74.25c a share, taking its total dividend to 143.18c, down 2% from last year. 

The fund says it will continue with its strategy of reducing its office exposure to ensure that its portfolio is more optimally balanced in the future. It's committed to selling 16 properties worth R1.1 billion, mostly in the office space. 

It says the operating environment for property funds is likely to remain subdued and the office sector is expected to remain under pressure. It's prioritised getting tenants for vacant space and says it will strategically increase its offshore exposure. 

Emira's shares ended trade 1.5% lower at R14.18c



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