Emira Property Fund has released an update on the operational performance of its investments for the five months ended 31 August 2024.
The listed diversified real estate investment trust's (REIT) local commercial portfolio, encompassing retail, industrial, and office properties, has performed well and in line with expectations.
It's retail portfolio includes Randridge Mall, Boskruin Village Shopping Centre and Mitchell's Plain.
Total vacancies increased slightly to 4.3% by GLA at the end of August 2024, up from 4.1% in March 2024, primarily due to disposals during the period.
Tenant retention remains strong, with 87% of leases maturing during the period retained, it said. The weighted average total reversions were stable at -3.1%, compared to -3.3% in March 2024.
The Fund’s weighted average lease expiry (WALE) improved to 3.0 years from 2.7 years in March 2024, with average annual lease escalations maintained at 6.5%.
Collections versus billings for the period were 95.9%, expected to revert closer to 100% by the end of September 2024.
Six properties were transferred out of the Fund, generating total gross proceeds of R446 million. These disposals included two retail properties and four industrial properties.
An additional 20 properties are under contract for disposal, expected to generate R1.9 billion in gross proceeds once completed.
Sector Performance
Retail: Vacancies increased to 4.2% from 3.9% in March 2024. WALE improved to 3.6 years, with 92.4% of maturing leases retained. Weighted average reversions declined to -5.7%.
Office: Vacancies decreased to 9.1% from 10.9% in March 2024. WALE reduced to 2.5 years, with 69.2% of maturing leases retained. Weighted average reversions declined to -10.7%.
Industrial: Vacancies increased to 1.6% from 0.7% in March 2024. WALE increased to 2.9 years, with 86.6% of maturing leases retained. Weighted average reversions improved to 4.4%.
Residential Portfolio
The residential portfolio, consisting of 3,612 units, saw vacancies rise to 5.0% by units as of 31 August 2024, up from 4.5% in March 2024. Excluding held-for-sale units, vacancies were 3.4%. Collections versus billings were 99.0%.
The Fund transferred 163 residential units during the period, realizing gross disposal proceeds of R149.2 million. An additional 31 units are under contract, with 24 expected to transfer by 30 September 2024.
USA Portfolio
The US portfolio, comprising 12 equity investments in grocery-anchored, value-oriented, open-air power centres, remained stable with vacancies at 3.6%, it noted.
The properties are performing in line with expectations.
DL Invest Group S.A (“DL Invest”)
On 27 August 2024, Emira acquired a 25% interest in DL Invest through a €55.5 million subscription, enhancing its international exposure and diversifying its investment portfolio. Emira will receive a return on the Linked Units of at least 7.2%, escalated annually by the Harmonised Index of Consumer Prices for the European Area (HICP).
Capital Management and Liquidity
As of 31 August 2024, the Fund had unutilized debt facilities of R300 million and cash-on-hand of R144 million.
The Fund’s loan-to-value ratio increased to approximately 43.4% due to the DL Invest subscription, partially offset by property disposals.
The LTV is expected to reduce once the properties under contract for disposal are transferred and proceeds are used to reduce debt.
Emira said it remains on track to achieve most of its objectives for FY25, demonstrating resilience and strategic growth in its portfolio management.
Shares in the group are up some 40% over the past year, giving it a market cap exceeding R5.68 billion.
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