Emira Property Fund reported strong operational results, strategic delivery, and capacity-enhancing active capital recycling for its financial year ended 31 March 2024. It declared a full year dividend per share of 117.02c.
Its net asset value per share increased by 2.2% to 1,733.10 cps over the twelve months.
Emira expects to deliver marginally higher distributable income for its current financial year to 31 March 2025. This is despite ongoing low-growth expectations for South Africa, persistently high interest rates and general market uncertainty.
Emira’s directly held portfolio consists of 90 properties located in South Africa worth R12.1bn, which are split between the commercial – retail, office, industrial – and residential sectors.
Its direct commercial portfolio is split between urban retail (43% of directly held SA portfolio value), office (24%) and industrial (14%). All sector vacancies are well below the applicable benchmarks, reinforcing Emira’s effective leasing strategies.
Its 17-property strong directly held retail portfolio of primarily grocery-anchored neighbourhood centres catering to their communities is trading well with improved metrics.
The total weighted average rental reversion lifted from -5.5% to -0.5%. Vacancies were a low 3.9%, tenant retention was stable at 88.7%, and the weighted average lease expiry (WALE) was steady at 3.2 years.
Despite depressed fundamentals in the office sector, Emira’s portfolio of 20 mainly P- and A-grade office properties saw key operational metrics move in a positive direction. Improved office vacancies moved down from 12.5% to 10.9%.
The total weighted average rental reversion lifted from -14.8% to -6.3%. Tenant retention was 59.1% and the WALE was maintained at 2.7 years.
Emira’s diversified industrial portfolio of 32 properties enjoyed strong demand and delivered defensive performance. The portfolio is near full occupancy, with vacancies decreasing from 2.1% to 0.7%.
Emira leveraged the robust demand when negotiating lease terms, and rental reversions improved from -6.5% to -4.8%. Tenant retention increased to 84.6%, and the WALE improved to 2.1 years.
Residential rental assets increased from one to 21 properties over the year – or 19% of Emira’s directly held SA portfolio – and include The Bolton in Rosebank, Johannesburg, and 20 properties from Transcend.
The portfolio of 3,775 units is split between Gauteng’s (87% by value) and Cape Town’s (13%) high-demand areas.
With a 2.6% vacancy, excluding units held for sale, the portfolio is achieving rental growth, as demand for rental accommodation rose in response to the elevated cost of owning property due to higher interest rates.
Overall, the commercial portfolio benefited from R168.2m in tactical upgrades, including various sustainability-driven initiatives, reconfigurations and refurbishments.
Emira also invested R25.3m into its residential portfolio, mainly to focus on making buildings more resource-efficient and backing this up with EDGE certifications, as well as enhancing lighting and safety at properties during power cuts.
“Deteriorating municipal infrastructure remains a concern, as our properties and the entire real estate sector rely heavily on it. Difficulties with electricity, water, and other essential services with rising associated costs make it tough for Emira and our tenants to operate effectively, " said Geoff Jennett, CEO of Emira Property Fund.
"In response to these challenges, Emira has fast-tracked projects to harness solar power, save water, and install backup systems so that when services fail, our tenants can keep their lights on, their doors open, and their businesses thriving."
Emira’s balance sheet remains healthy, with a more than adequate 2.3x interest cover ratio and a loan-to-value ratio that decreased from 44% to 42.4%. It reported unutilised debt facilities of R1bn and cash on hand of R180.8m.
Emira said it has a strong and diversified financial foundation, with support from major South African banks and the proven ability to access the debt capital markets.
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