Disposal and upgrades aid Emira distribution

JSE-listed Emira Property Fund reported a “substantial turnaround” for the year ended June‚ with 3.5% growth in distributions to 114.59c per participatory interest‚ following a distribution decline in the prior year.

CEO James Templeton said on Tuesday the turnaround was the result of improved leasing‚ rigorous cost controls and portfolio-strengthening acquisitions‚ disposals and upgrades.

Emira’s participatory interest holders received a total return of 26.2% for the year‚ with a capital return of 17.3% and income return of 8.9%. The fund’s net asset value increased by 14.9% to 1‚325c per participatory interest.

“The results of our new strategy now clearly show in the numbers‚ with every metric improving during the reporting period‚” Templeton said.

He said that over the past two years the fund had improved the quality of its investment portfolio‚ as well as achieving better occupancy levels and tenant retention.

“We’re expecting an even better year for 2014 — the headway made lowering vacancies during the 2013 financial year will continue to flow through and‚ based on current forecasts‚ should result in real distribution growth for our inventors in the coming year‚” Templeton said.

Alternative Real Estate fund manager Maurice Shapiro said the “pleasing results” were due to “multifaceted progress by management”.

Emira had improved its leasing and achieved lower property management fees and lower funding costs‚ Shapiro said.

“Management have continued to improve the property portfolio and enhanced the quality of the buildings‚ while delivering efficiencies with tight cost and credit controls. We are particularly pleased about Emira’s net asset value growth of 14.9%‚” Shapiro said.

Kagiso Asset Management investment analyst Justin Floor said Emira had delivered “solid growth”‚ with a significant reduction in vacancies‚ although this was most likely due to lower rentals being offered to attract tenants.

“It appears that management successfully timed some interest rate hedging before the spike in yields earlier this year‚ which is a positive as far as ongoing finance costs are concerned.

“The fund’s balance sheet looks strong compared to most of the sector‚” Floor said.

He said‚ however‚ that the supply and demand outlook for office segments‚ given the large amounts of expected developments over the next few years and “tepid” economic growth‚ “is a key concern facing all property names with significant office exposure”.