Emira declares 52cps half-year dividend off robust portfolio structure, rental collections and liquidity

Emira Property Fund (JSE: EMI) reported a half-year dividend of 52 cents per share and distributable income of R333.7m for the six-month interim period to 31 December 2020.

Emira is invested in a quality, balanced portfolio of diverse office, retail, industrial and residential properties. It has 78 directly-held properties valued at R9.9bn in South Africa and equity investments in 10 grocery-anchored open-air convenience shopping centres in the USA. Its portfolio is diversified across property sectors and internationally in a combination of directly-held assets and co-investments with partners who are experts in their respective fields. The Emira portfolio is structured for adaptability to deliver stability and sustainability through different economic and property cycles.

Geoff Jennett, CEO of Emira Property Fund, comments, “In the context of the current uncertain and challenging operating environment, these results reflect the robustness of Emira’s business, portfolio and processes. A key feature of a REIT investment is its cash-backed income component and at Emira we believe that if we can reasonably pay dividends while still protecting our business’s longevity, we should. We are confident that our decision to pay an interim dividend, albeit at suitably conservative levels, is the right one for our shareholders.”

Emira also continued to look after the interests of its tenants, staff, service providers, portfolio of assets, co-investors, funders, communities, and environment. “It is our actions in all these areas that come together to form a sustainable business,” notes Jennett.

Continuing efforts to ensure as many of its tenants as possible survive the COVID-19 pandemic lockdowns’ adverse effects, Emira provided support to 363 tenants with a further R17.8m in permanent rental remissions during the six months. This relief supported some high-risk tenants including gyms, restaurants and entertainment venues. Emira expects to consider further rental concessions in the second half of its financial year, on a limited case-by-case basis.

During the six months from July to December 2020, the effects of the pandemic and its various lockdowns in South Africa continued to batter the local economy, business confidence and household spending placing massive pressure on all key property metrics.

While Emira’s overall direct South African portfolio vacancies edged up from 4.1% to 5.9%, they remained low relative to national averages. Emira’s only directly held residential property, The Bolton, increased its occupancy from 80.9% at the start of the period to 97.5% at the close.

Emira enjoyed a pleasing improvement in rental collections, with collections as a percentage of billings at 99% for the six months ended 31 December 2020. The collection of deferred rentals, in particular, was better than anticipated at 80%.

Emira achieved impressive tenant retention of 83% by gross lettable area (GLA), the largest renewal being the South African Local Government Association at Menlyn Corporate Park in Pretoria, for over 7,000sqm. In addition, it concluded some new leases during the period, the largest being iMvula Healthcare Logistics in 3,500sqm at 1 Medical Road in Johannesburg.

“Overall, the outlook remains challenging and uncertain with further increases in vacancies and reversions still ahead for the property sector. More than ever before, Emira is focusing on maintaining its occupancy levels by retaining existing tenants. Close tenant relationships promote the understanding and agility to deliver appropriate, good quality, well-priced space, which benefits tenant retention and attraction. The manner in which the Emira team has supported and collaborated with our tenants through the pandemic has strengthened relationships, positioning them well for the future, and I commend our people and partners for this achievement.”

As part of its strategic asset management, Emira has an ongoing capital recycling programme and, under this focus area, Emira disposed of a Gauteng building to its tenant, Steiner Services. The R34.5m sale price realised a 17% premium to book value and an exit yield of 8%, supporting Emira’s realistic property valuations. It has two assets valued at R171.3m held for sale.

Emira continued to maintain and improve its properties while scrutinising capital expenditure. Fortunately, consistent investment into the portfolio over the years has ensured that its portfolio remains relevant and attractive on the whole. Elevating energy efficiency and water conservation remains a focus area of its capital improvements. Its photovoltaic (PV) solar programme’s positive environmental and operational impacts were further enhanced with two new installations completed and one commenced during the period.

“We continue to expedite alternative energy supply, water harvesting and back-up power projects in light of utilities supply disruption and the overinflated increases of utilities, rates and taxes costs,” notes Jennett. Emira kept a keen focus on containing costs. Even so, its property expenses increased 5.9% during the six months.

Emira’s equity-accounted investments – Transcend Residential Property Fund, Enyuka Property and its USA investments – delivered R118.3m of distributable income for the half-year.

A 34.9% stake in specialist JSE Main Board listed REIT Transcend gives Emira indirect exposure to the residential rental property sector. Transcend’s total property portfolio is valued at R2.5bn, and Emira received R23.4m of distributable income from Transcend.

Through Enyuka, a dedicated rural retail property venture with One Property Holdings, Emira invests in 24 lower-LSM shopping centres valued at R1.7bn. Notwithstanding the economic impacts felt during the six months, the rural retail sector outperformed all other retail sectors, resulting in lower-than-expected rental concessions granted. Emira received R41.9m of income from Enyuka via interest on its shareholder loan, as well as an asset management fee of R2.3m.

On the international front, Emira invests in grocery-anchored dominant value-orientated convenience retail centres in robust markets in the US with the Rainier Companies, and Emira’s share had a carrying value of R1.4bn at the close of the period. The type of property in which Emira invests in the US performed better than enclosed malls and lesser quality properties in the context of COVID-19. They are geared towards communities, provide essential goods and services especially with grocer anchors, focus on the popular value retail segment, have quality tenants, and offer open-air environments where people feel safe. The period was defined by reduced COVID-19 restrictions, more government stimulus and relief, fewer tenant requests for rental relief, and a high 100.4% collection of all rentals billed. Distinguished by sound property fundamentals and a high-quality tenant base, the portfolio has a weighted average lease expiry of 5.9 years. With limited leases up for renewal, a positive rental reversion of 1.5% was achieved, but, as expected, vacancies increased from 5.2% to 8.5%. Vacancies should reduce by year-end with deals that focus on high credit-quality tenants. Distributable income received by Emira from its investments in the US was R72.7m.

Emira reduced its direct portfolio value by a carefully considered 3.6% for the period and, in accordance and taking into account a reduced derivative liability number, its net asset value (NAV) decreased by the same percentage.

The REIT continues to benefit from diversified sources of funding and has facilities across all major South African banks. Emira met all commitments to its funders and reduced its finance costs by lowering its debt levels and as a result of lower interest rates. It reduced its loan-to-value (LTV) ratio slightly from 43% to 42.5%, as it moves closer to its long-term LTV target of below 40%. Emira closed the interim period with a group interest cover ratio (ICR) of 3-times. Global Credit Rating Company affirmed Emira’s corporate long-term credit rating of A(ZA) and short-term rating of A1(ZA) with a negative outlook, in September 2020. At 31 December 2020 it had access to undrawn facilities of R720m and cash on hand of R122.6m, which adequately covers short-term commitments.

Continuing its good business journey, Emira made a significant improvement in its B-BBEE rating, moving from a level 5 to a level 2 contributor, with a verified effective 76.68% black ownership. The improvement furthers Emira’s positive role in the economy and society.

At Emira, our numbers show that we are consistently doing all the basics, and doing them well, even in an exceedingly difficult environment. We are encouraged by the possibility of an ongoing low-interest-rate environment and the potential for economic recovery increasing towards the end of 2021 provided that the rollout of vaccines goes ahead successfully. Emira will continue to protect and generate value for our stakeholders with a robust balance sheet, well-funded and sustainable operations, and a diversified, balanced portfolio of quality properties,” Jennett concludes.

Given the current uncertainty, Emira’s reiterated it would not provide earnings and distribution guidance until such guidance is highly probable. However, it reaffirmed its management KPI target for distributable earnings of 119.7 cents per share for the year to 30 June 2021.

Closing the economic gap through genuine reform and partnerships

The spread of COVID-19 since the beginning of 2020 continues to have a devastating impact on South Africa’s s socio-economic environment. Unfortunately, the spread of the virus escalated dramatically as we entered 2021, with a fresh surge in COVID-19 cases since December 2020, resulting in the reintroduction of extended level 3 lockdown measures.

In an effort to limit the effects of lockdowns on economic activity, household income and corporate earnings, save jobs, and contain the spread of COVID-19, the government introduced several relief schemes and initiatives. These initiatives included tax relief measures, a R500 billion fiscal stimulus package and several programmes to help SMMEs and their employees across sectors most affected by COVID-19 and lockdown measures.

While many of these programmes genuinely helped some companies, the success rate is not uniform across the various schemes. On the one hand, the Tourism Relief Fund was able to disburse its total R200 million budget to help 4 000 companies. However, arguably the fund itself is not enough to address the industry’s needs. On the other hand, the performance of the R200 billion Loan Guarantee Scheme has been dismal. Since its inception, participating banks have only approved around R17.84 billion in loans under the scheme, with the value not expected to surpass R19 billion.

In terms of tax relief measures, government announced multiple measures, including several tax payment deferrals, fast-tracking VAT refunds, and a tax subsidy to employers. These measures were expected to provide support for businesses to continue operating and pay employees and suppliers.

While it’s hard to ascertain how much support companies actually received, monthly tax revenue collection data from the National Treasury shows that there has been a significant slowdown in tax collection from some tax categories beyond the effects of slower economic activity. For instance, from April to December 2020, the skills development levy collection contracted by 44.5%, the most significant drop in any tax category. At the same time, VAT refunds throughout the year have accelerated, growing from about R16 billion in February to over R20 billion in December.

The COVID-19 related lockdowns led to a substantial decline in South Africa’s economic growth in the second quarter of 2020. Positively, GDP growth rebounded at the start of the second half of 2020, surging by a massive 66.1% quarter-on-quarter, seasonally adjusted and annualised. While the bounce back in economic activity resulted from the lifting of the severe COVID-19 lockdown measures, the cuts in interest rates by the SA Reserve Bank and the increased and extended social payments and other relief measures by the government provided further support.

Although the South African economy improved far more than expected in Q3 2020, the subsequent resurgence in COVID-19 infections unfortunately dampened the recovery into the first part of 2021. For 2020, South Africa’s GDP is expected to have contracted by around -7.4%, while for 2021, GDP growth is forecast at around 3.5%. Considering that between 2015 and 2019, South Africa achieved an average annual growth rate of only 0.8% and a mere 0.2% in 2019, growth of 3.5% in 2021 appears encouraging. Still, it is well below the level of output required to reverse the losses experienced in 2020. South Africa’s economic growth needs to be at this level on a sustained basis to generate a meaningful increase in employment.

The main driver of the economic recovery is the strong base effects, as all sectors of the economy continue to recover from historic lows. In addition, the global recovery should support South Africa’s rebound. A generally weaker rand, coupled with strong commodity prices should boost key mining exports, also helping South Africa’s economic performance.

Given that consumption makes up almost 60% of South Africa’s GDP, the rebound in retail activity and the service sector will be important in South Africa’s growth trajectory for 2021. The consumption recovery is expected to be led by high-income consumers who have kept their jobs and maintained their income during the pandemic. While the sharp rise in joblessness disproportionally affected low-income consumers, they benefitted from the top-up in social grants, the COVID-19 relief of distress grant and employment programmes. The historically low interest rates and the subdued inflation rate has also led to a recovery in retail activity, although this has been uneven and relatively slow.

Although the recovery in economic growth is highly dependent on the successful distribution of effective COVID-19 vaccines, this could be stalled by ongoing load shedding and the threat of government implement stricter lockdown measures in response to any future resurgence in infections. Consequently, limiting the spread of the virus, providing relief for vulnerable populations, and overcoming vaccine-related challenges are key immediate priorities for South Africa.

In trying to improve South Africa’s growth performance in the medium to long term, this year’s National Budget’s policy choices reflect that fiscal policy is currently ineffective in directly revitalising the South African economy. In particular, government cannot afford to cut taxes extensively to boost household consumption and corporate investment given the extreme fiscal constraints. Equally, the National Treasury has very little scope to meaningfully further increase public spending, given that its current debt trajectory has worsened considerably.

With that said, government’s growth initiatives need to move ahead rapidly in trying to initiate a wide range of private/public partnerships to stimulate growth and employment. This includes continuing to make it easier to do business. Fortunately, there is a clear intention on the part of government to implement a range of drastic changes to the government’s budget in order to control expenditure, but at the same time find a way to implement a series of growth-friendly policy initiatives, including government’s infrastructure initiative.

Ultimately, the success of the government’s growth and employment agenda in 2021 and beyond will be determined not by the quality of its policy documents but instead by its ability to make progress in implementing real reforms that encourage the business sector and population in general. Closing the gap between South Africa’s current trend growth rate, and a modest target of 3% on a sustained basis is going to require a significantly greater implementation effort than is currently evident, including the coordination of economic policy across key government departments and actively partnering with the private sector.

Impact of Covid-19 still felt but Hyprop makes very good progress implementing revised strategy

Hyprop, the retail-focused REIT with a R45.4 billion portfolio of shopping centres in South Africa, Eastern Europe and sub-Saharan Africa, improved its distributable income by 18% in the six months to 31 December 2020 compared with the six months to 30 June 2020.

Distributable income was R473 million for the period, after the direct impact of Covid-19 which was R244 million across the total portfolio. Hyprop extended a lower level of Covid-19 related discounts to tenants in the second half of calendar 2020 than in the first half, with R104 million of rental discounts on the South African portfolio granted in the second half of calendar 2020.

“Trading conditions continued to be difficult, especially in December 2020, as lockdown restrictions affected trading hours, seating capacity and the psyche of many shoppers. As a Group we focus on the things we can influence and we are making good progress implementing our strategy,” says CEO Morné Wilken.

“The support we provided for our tenants has strengthened our partnerships with them and other service providers, helped us to manage vacancy levels, retain key tenants and ensure that our malls continue to be functional and serve their communities.

“Hyprop remains committed to creating safe environments and opportunities for people to connect and have authentic and meaningful experiences. While Covid-19 has changed our operating environment, we have ensured that our strategies and key priorities remain relevant.”

Hyprop reduced interest-bearing debt by R942 million in the last six months, settled all its dollar equity debt, and strengthened its balance sheet even further by retaining R777 million from its distributions for the 2020 financial year. The loan to value (LTV) ratio has reduced from 41.4% as at 30 June 2020 to 38.8% and ICR remains healthy at 2.6 times.

At the end of December, Hyprop had R528 million of cash on balance sheet and undrawn facilities of R1,15 billion.

Regional overview

South Africa

In South Africa (SA), vacancies in the retail portfolio increased to 3%, which is still well below the average of its peers in the market. Rental increases remain under pressure and tenants are showing a reluctance to commit to long-term leases until conditions improve. This may however be beneficial in the long run as the impact of Covid-19 dissipates, and the benefits of repositioning the SA portfolio accrue to justify higher rentals on future renewals.

We have completed phase one of installing free, high-speed Wi-Fi at all our South African malls and will shortly begin phase 2.

New lettings included the opening of a Checkers FreshX in Rosebank Mall in December 2020. The old Game premises at Woodlands Boulevard is being replaced by a Checkers FreshX store and a Stax. We have also agreed terms with Checkers to upgrade their store at CapeGate to the Checkers FreshX specification. There is heightened interest in Hyde Park Mall, where we have, among other new tenants, secured Tshepo Jeans, a fast-growing brand with a large social media following that marks the emergence of new, entrepreneurial retailers. KOL, a new restaurant and co-working space established by the founders of Willoughby’s, will open at Hyde Park Corner in March 2021.

Emphasising the importance of relevance and sustainability of Hyprop centres as key, Wilken comments: “We are currently piloting several initiatives to improve foot count, one of which includes the Pargo collection points at Canal Walk and The Glen. It is encouraging to see that collections at these points are steadily increasing. A number of these collections are for products not sold in our malls, meaning that we are broadening our customers’ choices without increasing lettable area. Parkupp is a parking app that gives users the ability to secure parking on a flexible basis and is being tested at Canal Walk and Rosebank Mall.

“The first SOKO district pilot at Rosebank Mall is on schedule to open in June 2021. SOKO means “market”, and the SOKO District will be a marketplace where retailers can rent space and reusable shop fittings via a flexible digital leasing platform, without the significant financial commitments that exist in the traditional retail environment. The leasing platform is powered by data driven shopper, product and trend analyses, that will result in location recommendations that match retailers, products and shoppers, across our portfolio.”

Eastern Europe

Our interests in Eastern Europe (EE), held through a 60% stake in UK-based Hystead Limited, reflect a continued difficult trading environment. Recovery from the first wave of lockdowns was slow and in November 2020, when a second wave of infections hit the region, restrictions were re-imposed. However, with the roll-out of vaccines in Europe, we expect conditions to improve in the second half of 2021.

The vacancy in the EE portfolio was 0.4% at end-December. 23 new stores were opened in the six-month period, and another 23 are planned for the first quarter of this year. Replacement tenants have been secured for six of the seven stores to be vacated by the Inditex Group as part of their restructuring. The countries where our malls are located were in good economic standing before Covid-19 and we believe our malls will bounce back quickly as vaccines are rolled out and the impact of Covid-19 dissipates.

Sub-Saharan Africa

Hyprop has previously announced plans to reduce its exposure to sub-Saharan Africa. The previously announced disposal of our 75% interest in Ikeja City Mall in Nigeria remains subject to the fulfilment of certain conditions.

Since the relaxation of trading restrictions in Nigeria and Ghana, key metrics have improved and trading densities for 2020 are higher than in 2019.


In the short-term, Hyprop’s strategy will centre around reducing its debt further, limiting capital expenditure to projects already committed or essential, continuing the disposal of assets such as those in the sub-Saharan portfolio and Atterbury Value Mart, as well as recycling other assets that do not fit into our long-term strategy.

On a longer-term basis, the Company will continue to reposition the SA portfolio, increase the dominance of the properties in the European portfolio, and pursue the non-tangible asset strategy.

“Although we expect to face further challenges in the next two years, we believe the strength of our dominant retail centres in mixed-use precincts in key economic nodes within South Africa and Eastern Europe, our partnerships with our tenants and the agility of our responses will enable Hyprop to meet and overcome these challenges,” says Wilken.

“Our initiatives to grow the group’s non-tangible asset base are being intensified and we are making good progress.”

Hyprop concludes agreements to dispose of Atterbury Value Mart

Hyprop, a South African listed retail-focused REIT, today announced that it has successfully concluded agreements to dispose of Atterbury Value Mart for an aggregate consideration of R1.12 billion; 4,6% below the current market valuation. The Company has reached agreements with three private parties who will each acquire a one-third undivided share in the property.

Hyprop’s strategy is to create safe environments and opportunities for people to connect and have authentic and meaningful experiences by owning and managing dominant retail centres in mixed-use precincts in key economic nodes in South Africa and Eastern Europe. The disposal of Atterbury Value Mart is in line with this strategy and its key priorities to recycle non-core assets and strengthen its balance sheet.

Hyprop CEO Morné Wilken said he was pleased with the outcome. “The team has made a lot of progress implementing the revised strategy in the last two years, and I must commend them for concluding the agreements in a challenging environment.”

“Balance sheet strength remains a core focus for us and the conclusion of the transaction will result in Hyprop’s see-through loan to value ratio of 41.4% at 30 June 2020 reducing by 1.9% to 39.5%.”

Hyprop recently also announced that 82% of shareholders elected to accept the dividend reinvestment alternative recently offered to shareholders through which it retained R777 330 708 of cash as new equity as well, strengthening the Company’s financial position. The retained cash will be used to reduce the Group’s LTV further.

Hyprop Investments Limited +27 (0) 11 447 0090
Morné Wilken (CEO)
Brett Till (CFO)
Lizelle du Toit (Investor Relations) +27 (0) 82 465 1244

Equites Sells Two UK Logistics Properties to Real Estate Fund Managed By Blackstone

The JSE listed specialist logistics property fund, Equites, today officially announced that it has sold two high-quality UK distribution warehouses to real estate funds managed by Blackstone for £43,400,000, being a 4.79% net exit yield and 6% premium to Equites’ book value.

The sale proceeds will be re-invested into the development of prime distribution warehouses by the Equites/Newlands JV, with the new warehouses let on 20- and 15-year leases to Hermes and Amazon. This transaction will realise net cash proceeds of £23,679,779 to Equites, while lowering the loan-to-value ratio across its portfolio.

The newly formed strategic partnership with Newlands in the UK has gained significant momentum and the proceeds of this sale will be invested into the premium logistics products that will be developed by the Equites/Newlands partnership. The partnership has recently concluded two development agreements with Amazon and Hermes, with total development costs of £41 million and £72 million, respectively. The two facilities that Equites will ultimately hold will be brand-new premium logistics facilities, built to institutional standards and let to high-quality tenants on long-term leases.

Link to Equites’ stock exchange notice here.

Andrea Taverna-Turisan, the CEO of Equites, commented:

“We have curated a high-quality UK logistics portfolio since we entered the UK market in 2016, which today has a total portfolio value in excess of £320 million. We look forward to re-investing the proceeds from these disposals into our partnership with Newlands, which currently affords Equites an attractive pipeline of world-class logistics developments in the UK.”

For further information, please contact:
Laila Razack (Chief Financial Officer)
Tel: +27 21 460 0404;

Equites Property Fund Limited (“Equites”) is a South African REIT, with a clear focus on being a market leader in the logistics property market by developing and acquiring A-grade, modern logistics facilities in prime locations in South Africa and the United Kingdom. Equites listed on the Johannesburg Stock Exchange (“JSE”) on 18 June 2014 with a portfolio value of R1 billion and has since grown to a portfolio value to R16 billion at August 2020. The group continues to grow its portfolio through a significant development pipeline and high-quality acquisitions. Equites is the only listed property entity on the JSE to provide shareholders with pure exposure to prime logistics assets.


Real estate has long been a rewarding sector of the financial markets. Like all sectors, share prices and the underlying fundamentals of commercial property assets weakened in early 2020, as South Africa and the rest of the world came to grips with managing through the pandemic, with some sectors suffering more than others…