SA Corporate Real Estate gives upbeat 2022 outlook

SA Corporate Real Estate said its industrial portfolio comprising primarily logistics, and convenience-orientated retail properties has proven defensive during the pandemic and this would continue into 2022. 

The JSE-listed real estate investment trust (Reit) owns retail, industrial, offices, storage and residential assets in SA, and a three properties in Zambia through a joint venture. 

CEO Rory Mackey told Business Day that the company is ending 2021 in a considerably stronger position than at the beginning of the year. 

“Our retail portfolio has bounced back strongly, substantially shedding rental relief that was required to be offered in the prior year. The industrial portfolio continues to be robust with almost no vacancies, and through disposals we have refined the quality of the portfolio,” said Mackey.

At 30 November, industrial vacancies were 1.5%, while those for retail vacancies reached were 4.6%. 

In an update before its closed period,  the group reported 99% rental collections in November, up from  96% in the third quarter of 2021, and including the recovery of rates and utilities bills across its SA property assets. 

Rental collections exceeded 100% within the retail, storage, residential and student assets in November. Like-for-like total net property income rose 9%, with retail recording the highest growth of 19.4%, followed by Afhco (5.3%) and industrial (1.5%). Office assets, though, fell 20.7%, the company said. 

SA Corporate Real Estate bought Afhco, a portfolio of affordable rental apartments, retail, commercial, and light industrial assets in the inner city of Johannesburg, in 2014. 

Vacancy rates for residential (excluding student accommodation) and retail unit were 6.6% and 5.9%, respectively, in November and are declining.  Demand for retail space is such that vacancies are filled as soon as space becomes available, SA Corporate Real Estate said.

“Afhco is showing positive growth evidencing the portfolio stability achieved by attracting new tenancy that has contributed to a substantial reduction in vacancy. We have put a lot of work into establishing a platform for growth in our residential portfolio and this is expected to be evident in 2022,” said Mackey.

The group’s divestment from office properties, repurposing of some buildings and leasing efforts has enabled it to mitigate risk from that market which continues to deteriorate, he added.

mhlangad@businesslive.co.za