Emira Property Fund has managed to turn its fortunes around over the past two years, thanks largely to strong offshore acquisitions in the US.
The group released results for the six months to December on Wednesday, showing it grew its dividend per share 3.1%, in line with guidance.
Some fund managers said the group had become a reliable property fund again, having taken about two years to implement a turnaround strategy.
Emira had struggled to fill vacancies at old B- and C-grade offices, and saw its dividend growth fall 2% in the year to June 2017. It then restructured its asset base quickly by selling numerous offices and improving leasing across its portfolio.
It also invested in the world’s largest commercial property market for the first time by buying grocery store-anchored US retail parks in partnership with private group, Rainier.
The company now has R760m worth of exposure to six US retail parks. It also has R918m worth of exposure to Growthpoint Australia and owns R528m or 34.9% of SA’s Transcend, a residential fund. It owns R12.71bn worth of SA property directly.
“This is a good set of results from Emira. The turnaround of the business and the strategic positioning going forward is very favourable. The retail deals in the US market have added to dividend growth,” Nesi Chetty, head of property at MMI Investments, said.
Chetty said offshore properties now accounted for 10.8% of Emira’s balance sheet. He said Emira had worked hard to get its office vacancies down to 5.6% from 9.4% at the end of December 2017.
This was while the national office vacancy average was 11.1%, according to the SA Property Owners’ Association.
Emira’s total vacancy factor fell from 4.5% at the end of December 2017 to 3.7% at the end of December 2018. Chetty said Emira was trading at a yield in excess of 10% and a 14% discount to net asset value, which offered support for valuations going forward.
Evan Robins of Old Mutual Investment Group said Emira’s results showed the company was on a healthy growth path under CEO Geoff Jennett.
Jennett said Emira had disposed of a R1.8bn 25-office asset portfolio to Inani Prop Holdings. He said the transaction reduced Emira’s office exposure from 35.7% to 25% of total assets.