Emira continues emigration from the office sector

Further investment in offshore, residential

LISTED property fund Emira has said that it planned to continue reducing its exposure to the South African office sector to prioritise further investment on its offshore and residential portfolio.

Emira chief executive Geoff Jennett said yesterday that the group had earmarked 26 properties at end-June for disposal to the value of R1.9 billion, of which R1.8bn were office properties, in line with the fund’s strategy to rebalance its portfolio.

Jennett said Emira sold 13 properties, including seven office properties, that were either deemed non-core, under-performing or posing excessive risk for a total of R530.6 million in the year to June.

He said these disposals reduced Emira’s office exposure to 35.7 percent from 38.7 percent of the total assets, with the disposal proceeds recycled into the fund’s international investment strategy.

The properties were sold at a combined premium to book value of 14.8 percent. Exposure Emira closed the year with 104 directly held South African properties valued at R12.5bn, with its international exposure increasing to 10 percent, of which its new US investment venture represented 3 percent.

Jennett said Emira liked the residential sector. “It is a great diversifier for our portfolio and we are actively pursuing opportunities to co-invest with sector specialists that cater for the lower middle-class rental residential property markets.

“We will also consider other residential conversions, should suitable opportunities arise,” he said.

Jennett added that Emira aimed to grow residential property to between 5 and 10 percent of its total portfolio.

Last year, Emira commenced with the R240m conversion of its B-grade offices in Rosebank, which were previously occupied by Sasol, into a contemporary residential apartment development.

Called The Bolton, the development was being undertaken with the Feenstra Group, a specialist partner and 25 percent co-investor.

Jennett said the project was converting 10 000m² of office space into 280 residential units, with the first units coming on stream this month. The project was scheduled to be completed by January next year.

Emira announced in October last year that it had embarked on an investment strategy into the US together with its partners, the Rainier Group of Companies. This resulted in Emira acquiring four grocery-anchored convenience retail centres in the US through its US subsidiary together with the Rainier Group.

Emira yesterday reported a 2.5 percent increase in distributions to 146.80 cents in the year to June from 143.18c in the previous year.

Jennett said that there had been a meaningful reduction in vacancies in the past year, which was the main contributor to the company returning to positive distribution growth.

Vacancies in Emira’s overall portfolio reduced to 3.4 percent at end-June from 5.7 percent in the previous year, with office sector vacancies decreasing to 7.1 percent from 12.5 percent. Growth IT IS NOW the sixth anniversary since the Marikana shooting at Lonmin, which saw police gun down 34 mineworkers at a koppie outside the platinum producer’s Marikana Mine, and since then the platinum sector has gone from bad to worse, with platinum prices at a historic low. Yesterday, the platinum price tumbled $30 (R435.99) to $775.68 at 5pm in London. Communities that rely on mining incomes have been hard hit as the mining job bloodbath has worsened. Impala Platinum (Implats) this month added to South Africa’s economic woes, announcing that it planned to retrench 13 000 employees in the next two years and shut some shafts as part of a restructuring programme, just days after information emerged that the country had shed nearly 300 000 jobs in the second quarter. Statistics South Africa revealed recently that the mining sector fell 9.9 percent during the first quarter, mainly due to lower production of gold, platinum group metals and iron ore. The mining sector is facing a continuing slump in commodity prices and high production costs. – Staff Reporter