Emira’s performance boosted by sector and geographic diversity
LOCAL property fundamentals remain under pressure despite signs of an economic upturn, but the sectoral and geographical diversity of Emira Property Fund’s assets were likely to again prove defensive through the third wave of the pandemic.
As anticipated, however, vacancies had increased to 6.5 percent of gross letting area at the end of May 2021, up from 5.9 percent at the end of December 2020, the group said in a pre-close statement yesterday.
Tenant retention was a focus and 80 percent (by revenue) of leases that matured in the 11 months to May 31 were retained.
However, retaining tenants and attracting new ones came at a cost, with the weighted average reversions for the same period at -14.6 percent versus -15.4 percent at the end of December 2020.
The weighted average lease expiry of 2.6 years was similar to that reported at its interim results.
Annual lease escalations remained under pressure at average 7.1 percent at the end of May. Average annual escalations on renewals was 7 percent.
Collections for the 11 months ended May 31 versus billings for normal debtors was at 98.9 percent.
Rental concessions had been provided on a case-by-case basis to tenants whose trading was restricted as a result of Covid-19 restrictions. Rent remissions of R31.7 million were provided for the 11 months to May 31.
The retail assets, which comprise 49 percent of the direct portfolio, and being mainly grocery anchored centres close to their communities, saw vacancies
increase marginally to 3.7 percent from 3.4 percent in December.
Notwithstanding the recent move back down to level 3 restrictions, there had been a noticeable increase in trading activity. In the retail sector.
On a like-for-like basis for the 10 months to April 30, tenant turnover figures in the retail portfolio increased by 5.4 percent.
In the office sector – offices comprise 31 percent of Emira’s portfolio – many corporates were assessing their
long-term space requirements, while there was also an oversupply of offices.
Emira’s office vacancies increased from 14.9 percent at December 31, to 16.4 percent at the end of May 2021, and rentals remained under pressure.
In Emira’s industrial properties, comprising 18 percent of the portfolio, vacancies rose to 4.3 percent from 3.9 percent, but demand was increasing and rentals on renewals and new deals were encouraging. Enyuka’s portfolio of retail assets in Enyuka – Enyuka comprises 5 percent of Emira’s investments and which is focused on lower LSM markets – had remained resilient.
Transcend, comprising 3 percent of Emira’s investments, continued to perform well, demonstrating the defensive nature of value-oriented quality residential assets.
Occupancy levels had stabilised, and collection rates have been strong.
The US portfolio, comprising 11 equity investments into grocery anchored, value oriented, open-air power centres and comprising 13 percent of Emira investments, continued to perform in line with expectations.
Together with Rainier, the Emira concluded its 11th investment on June 16 with the acquisition of Newport Pavilion for $73.7m. Located in Newport, Cincinnati, in the State of Kentucky, the property was 97.7 percent occupied, with leasing deals being finalised on the two vacant suites. It was grocery-anchored by a Kroger Marketplace and Target.
Emira’s liquidity was strong with undrawn facilities and cash-on-hand of more than R980m at the end of May 2021. Emira’s share price closed 0.32 percent lower at R9.24 on the JSE yesterday.