EMIRA PROPERTY FUND
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%.