Picture: GALLO IMAGES/AFP/GIANLUIGI GUERCIA
Picture: GALLO IMAGES/AFP/GIANLUIGI GUERCIA

JSE-listed real-estate investment trust (Reit) Octodec Investments is considering changes to its policy of paying out 100% of distributable earnings due to the fallout from the Covid-19 pandemic.

The group, which has the majority of its properties in the Johannesburg and Tshwane city centres, said it expects to make its final decision on how much of its earnings it can pay out as a dividend, in November, but that its distribution per share for its year to end-August is expected to fall by at least 15%.

Octodec owns Killarney Mall and Woodmead Value Mart as well as an extensive range of residential properties in the inner cities of Johannesburg and Pretoria. It is headed by Jeffrey Wapnick, whose family founded real-estate manager City Property, which manages Octodec’s assets.

The company has been criticised in the past for being too tightly held by the Wapnick family and for the stock not having enough liquidity.

As of the end of February, the group had 280 properties worth R12.6bn, with Octodec saying on Friday it had seen an improvement in rental collection as SA's lockdown abated.

The group said it had collected 91% of rent in June, before rental relief, up from 74% in May. The group granted R33.8m in rental relief in June, and R44.7m of relief in May.

“The inherent defensive nature of Octodec’s portfolio, supported by a large and diverse tenant base focused predominantly in key nodes around the Johannesburg and Pretoria CBDs, coupled with continued focus on prudent balance sheet management and cash preservation, positions Octodec well to navigate the challenging period ahead,” the group said.

Wapnick said Octodec would focus on holding cash and cutting back on new initiatives while the pandemic persisted in SA.

He said Octodec needed to focus on its relationships with tenants and helping the smaller ones survive through the crisis. The fund was also focused on ensuring its staff was paid regularly throughout 2020.

Octodec currently has R400m worth of cash and committed undrawn debt facilities available.

“We continue to prioritise cash preservation, including reducing expenditure on upgrades and a moratorium on new projects, with the exception of critical and necessary capital expenditure,” said Wapnick.

In morning trade, Octodec's share was up 1.17% to R6.06, giving it a market capitalisation of R1.6bn. The group’s share has fallen 60.52% so far in 2020. (please check close)

gernetzkyk@businesslive.co.za 

andersona@businesslive.co.za

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