Finweek English Edition - - COVER STORY -

KEY IN­DI­CA­TORS: R6.9bn R13.3bn Of­fice, re­tail, in­dus­trial and a re­cent en­trance into res­i­den­tial SA, Aus­tralia 37.8% 84% (av­er­age term 2.9 years) 9.35% 3 hold (com­piled by IRESS) Mid-cap REIT Emira has been re­duc­ing its ex­po­sure to of­fice prop­erty in readi­ness for a tough mar­ket, par­tic­u­larly its B-grade of­fices that make up 11% of its port­fo­lio by value. Emira has sold off two prop­er­ties and com­mit­ted to a fur­ther 19 prop­er­ties val­ued at R917.1m. Un­con­di­tional sales have al­ready been con­cluded for R381.2m of these prop­er­ties. The tim­ing of its dis­posal pro­gramme has not as yet been af­fected by the down­grade.

The im­pact of junk, says CEO Ge­off Jen­nett, will be slow and not too mean­ing­ful in the shorter term, given that 84% of Emira’s debt book is hedged for an av­er­age 2.9 years.

And, he says, there is un­likely to be any mean­ing­ful im­pact on pos­i­tive growth in dis­tri­bu­tion fore­cast for 2018 be­cause of the largely con­trac­tual na­ture of the in­come streams. But the ex­tent of that re­turn will de­pend upon what ef­fect junk sta­tus has on the econ­omy.

The REIT has also been grow­ing its low-LSM re­tail port­fo­lio and base of ru­ral re­tail as­sets, join­ing forces with re­tail prop­erty spe­cial­ists ONE Prop­erty Hold­ings to form the spe­cialised Enyuka Prop­erty Fund.

Enyuka is op­er­at­ing well, says Jen­nett, the com­pany not ex­pect­ing to change its low-LSM strat­egy in the short term.

Re­silience is ex­pected from the com­pany’s re­cently im­ple­mented res­i­den­tial port­fo­lio. “We know that our new res­i­den­tial con­ver­sions [in Rose­bank, Jo­han­nes­burg] will hold up very well in a more dif­fi­cult mar­ket, par­tic­u­larly given the LSM 7-8 that we’re fo­cus­ing on and the good po­si­tions of the build­ings in ar­eas where we know there will be good de­mand.”

Dur­ing its half year to De­cem­ber 2016, Emira ac­quired more Growth­point Prop­er­ties Aus­tralia (GOZ) shares and now holds 4.9% of GOZ shares. In­come from GOZ for the pe­riod grew by 1.7%.

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