SA Corporate Real Estate grew its dividend 4.4% in the financial year to December, missing market expectations.
The company had said about half a year ago that it expected to grow its dividend 6% for the full 2017 year.
Total net property income increased 13.7%, with the like-for-like income increasing 5.7%.
Retail NPI growth of 14.2% was underpinned by strong tenant retentions of 79.9%, weighted average lease escalations of 7.6%, positive reversions of 5.5% and reduction in vacancies, according to the group.
The retail like-for-like (excluding developments) portfolio grew by 6.8% and if the growth generated from solar installations and green initiatives is included, this increases to 8.7%. The overall retail performance was further enhanced by proactive unlocking of value in the retail portfolio through redevelopments and improvements to tenant mix.
Industrial like-for-like portfolio net property income growth of 5.9% was better than inflation, supported by 8% rental escalations and tenant retentions of 83.9%.
SA Corporate was let down by its Zambian investment. The income from the investment in a Zambian joint venture fell 13.6%, due primarily to the appreciation of the rand and the expiry of the yield guarantee.
The company’s objective in 2018 is to consolidate its asset base and position its portfolio for sustainable future growth. This would be achieved by divesting from industrial and commercial properties that are at risk of extended periods of vacancies or substantial negative rental reversions.
Capital proceeds from the aforementioned disposals would be redeployed in the redevelopment of existing warehousing to state of the art logistics facilities and by improving the quality of the portfolio to meet tenants’ operational requirements.
The board’s view was that distribution growth would be flat for 2018 with a weaker first half followed by a stronger second half. The 2019 distribution was expected to at least inflation match inflation.