Emira Property Fund’s diversified nature saves the day says CFO Greg Booyens
Because of its investments in various sectors, Emira has managed to outperform SAPOA’s average results.
Emira Property Fund has outperformed South African Property Owners Association’s (SAPOA) average results, closing its financial year with a 6.4 percent vacancy level in its direct portfolio and increasing its tenant retention rate to 82 percent. Arrears decreased by R9.5 million over the year to R63.8 million.
CFO Greg Booyens accredits these results to the diversified nature of the company’s investments, which meant revenue was not overly exposed to any one sector, as “some sectors have been harder hit than others by the pandemic”.
The property group has 77 directly-held properties valued at R9.7 billion in South Africa and its equity investments in 11 grocery-anchored open-air convenience shopping centres in the US, representing 13.6 percent of its asset base. Its total portfolio is diversified across property sectors and internationally in a combination of directly-held assets and co-investments with partners who are experts in their respective fields.
“We are extra cautious in this environment on what capital is spent,” Greg says. “That said, we believe it’s important in times like this to continue to invest into existing assets to ensure they remain relevant and attractive to potential tenants.”
He adds that there are ambitions to grow Emira’s exposure in the US, but not at the expense of raising current debt levels. “This will be done by recycling capital through the disposal of non-core assets.”
Emira is still under contract to acquire the multi-tenant Northpoint Industrial Park in Cape Town for R103 million, but transfer has been delayed and is expected to take place by October 2021. It disposed of the Steiner Services property in Gauteng at a 17 percent premium to book value and an exit yield of eight percent, and currently has three assets, valued at R224.3 million held for sale.
To maintain and improve its directly-held assets, Emira invested R150 million in projects across its portfolio, which aligns with its short-term focus. It has prioritised containing and reducing vacancies in the face of oversupply and fierce competition. It is also expediting projects for alternative energy, water harvesting and back-up power in the face of utilities supply disruption and continued above-inflation increases of rates, taxes and utilities costs that pose major risks for the entire property sector.
Emira also has indirect exposure to the residential rental property sector, with a 34.9 percent stake in specialist JSE-listed REIT Transcend Residential Property Fund. Transcend’s total property portfolio is valued at R2.5 billion, and it contributed R37.8 million to Emira’s distributable income for the year.
Through Enyuka Property Fund, a dedicated rural and lower LSM retail property venture with One Property Holdings, Emira invests indirectly in 24 shopping centres valued at R1.66 billion, which continued to perform well. Enyuka contributed R83.7 million to Emira’s distributable income for the year.
Emira’s international investment strategy in the US with its partner, The Rainier Companies, saw the successful acquisition of its eleventh US shopping centre asset this year – the 336,907 square foot Newport Pavilion power centre on the doorstep of the world-class Cincinnati CBD.
Emira’s equity investments in the US now total R1.7 billion (USD118.9 million) and its after-tax income from equity co-investment in the US totalled R258.8 million of which R125.5 million is distributable and contributed R96 million to Emira’s distributable income for the year. A portion of income has been retained at property level in the US to ensure cash reserves remain bolstered.