GCR ratings affirm Dipula’s issuer rating of BBB+ (ZA) with a stable outlook

South African-focused, JSE-listed diversified REIT, Dipula Income Fund today announced that GCR Ratings (GCR) affirmed the Group’s national scale long and short-term issuer ratings at BBB+ (ZA) and A2 (ZA) respectively.

The ratings agency further attached a Stable Outlook to the long-term rating.

In their ratings announcement, GCR noted the ongoing solid performance of Dipula’s portfolio as well as the Group’s maintenance of financial discipline, including solid gearing and credit protection metrics as well as an improvement in financial flexibility.

Dipula CEO, Izak Petersen, commented:

“The affirmation of our credit rating by GCR underscores our efforts to improve operational and financial measures despite significant macro-economic challenges and a rising interest rate environment.

“We believe that there is the potential for an upward rating progression over the medium term, especially as we deliver on enhancing asset quality by converting some of our office assets to residential, as well as the current refurbishment and repurposing of some retail space.

“In addition, stable interest rates and the introduction of additional funders in our current financial year are expected to further improve our liquidity position.

GCR noted that Dipula’s capital structure should continue to improve, following the consolidation of two share classes into a single equity class with common rights in May 2022. Dipula has been able to negotiate a new syndicated debt facility with its major funders partly because of the single share structure. The new structure will allow for additional funders to be introduced over time, enhancing financial flexibility.

Despite higher debt levels used for capex, Dipula maintained stable gearing metrics with an LTV ratio ranging between 36% and 40% over GCR’s review period, well within the covenant level of 50%.

Although Dipula’s net interest cover ratio contracted to 2.8 times because of rising interest rates, GCR does not expect it to be near the 2 times covenant threshold.

In its outlook statement, GCR commented that Dipula is expected to continue displaying earnings resilience and that credit protection measures will remain in line with the rating level. It expects Dipula’s LTV ratio to trend between 35% and 40% and the interest cover ratio to be no less than 2.3 times and 2.6 times.

Beehive scheme brings sweet rewards at Emira

There’s a buzz around JSE-listed Emira Property Fund right now – and it’s nothing to do with the stock exchange. While bulls and bears tend to be associated with the world of listed property, Emira is quietly putting its weight behind another essential commodity: bees.

Since 2020, SA REIT Emira (JSE: EMI) has installed 16 beehives at eight of its properties in Gauteng and KwaZulu-Natal – and more are planned, wherever and whenever suitable.

According to Ulana van Biljon, Chief Operating Officer of Emira: “The beehive project was chosen to address the decline of global bee populations, which contribute so much to society, as well as the biodiversity of our properties.”

Bees are vital for pollinating plants, including food crops. According to the United Nations Food and Agriculture Organisation (FAO), a full third of global food production depends on bees as pollinators.

Simply put, all life on the planet relies on these essential workers, but they are increasingly threatened by human activity, under grave threat from habitat loss, pesticides, air pollution and climate change.

“Our bee conservation project is a holistic approach to reducing the impact of environmental degradation, which goes beyond planting trees,” says van Biljon.

The first hives were installed in August 2020 at Knightsbridge office park in the heart of the Bryanston business node, and Hyde Park Lane, a tranquil corporate address in Sandton.

These sites were selected, according to van Biljon, “due to their safe site location, the biodiversity of the surrounding landscape and the abundance of flowering plants which provide the nectar flow for the bees to produce honey.”

Subsequently, beehives were introduced at Wonderpark Shopping Centre in Pretoria North; One Highveld industrial premises in Centurion, Pretoria; Springfield open-air retail centre in Umgeni, Durban; Park Boulevard local shopping centre in Durban North; Albury Park, a garden-life office environment in Dunkeld, Johannesburg; and Epsom Downs Office Park near William Nicol offramp, Sandton.

Safety concerns were carefully considered, says van Biljon, noting that the public live in harmony with bees anyway: there are many natural swarms of bees throughout South African cities.

Emira’s beehives are managed in a safe, controlled environment, away from areas of heavy foot traffic and clearly sign-posted, while beekeeping activities take place at night.

The results so far have been sweet: these busy little workers have produced 85kg of honey to date from five hive sites: Knightsbridge (8kg), One Highveld (15kg), Hyde Park Lane (19kg), Wonderpark (20kg) and Albury Park (23kg).

The first honey harvests were shared amongst Emira staff and a few service providers, creating awareness of the importance of preserving biodiversity. It is their intention to make future honey available for their tenants at those properties that have the hives.

To the delight of the recipients, the honey collected from different properties all tasted unique. Bees tend to collect nectar within 3km of their hive, which meant Johannesburg honey was crafted largely from exotic garden ornamental plants like jasmine, lavender, rosemary and jacaranda trees. Meanwhile, Pretoria North – where hives are situated at Wonderpark Shopping Centre – has more indigenous plants, acacias, and grassland flowers, meaning honey with darker, flavourful herbal tannins.

All of it was delicious.

The honey is not for sale, although Emira is open to investigating charity initiatives as their buzzy new tenants continue to upscale production; instead, the profit is in biodiversity.

“Biodiversity is vital for healthy ecosystems, which support human well-being and the economy,” says van Biljon. “Healthy ecosystems form the ecological infrastructure of the country, providing clean air and water, fertile soil, and food.”

As part of Emira’s dedication to good environmental, social, and governance (ESG) practices, it has committed to a “No Net Future Loss” policy, conserving and promoting biodiversity across its portfolio and reducing the company’s impact on the environment.

“The country’s natural ecosystems are threatened by land use change, degradation and invasive alien species,” according to van Biljon. “Climate change worsens these threats, but healthy ecosystems offer natural solutions that increase resilience. They protect communities from extreme weather events and enhance natural resources, livelihoods, food security, and habitats for animals and plants.”

With the beehive project, Emira is putting the bee firmly into business, living up to its reputation as a truly diversified, balanced real estate investment trust.

Emira announces robust strategic and operational results

Emira Property Fund (JSE: EMI) announced strong operational results and continued strategic delivery for the nine (9) months to its new financial year end on 31 March 2023.

It declared a final distribution of 30.35cps for the three months ending 31 March 2023, taking its dividend per share for the nine months to 96.78cps. Its net asset value per share increased by 4.2% to 1,696.60cps over the nine-month reporting period.

While the nine-month financial period cannot be directly compared to either the prior or coming 12-month financial years, the company is firmly focused on its strategic progress and operational metrics. “They are in good shape,” says Geoff Jennett, CEO of Emira Property Fund.

Jennett attributes the positive nine-month performance to consistent strategic delivery, unlocking value from investments, a strong balance sheet and the added advantage of various capital recycling initiatives.

Jennett comments, “Both our SA and US portfolios delivered pleasing operational performances, notwithstanding local and global challenges. The solid results extend Emira’s consistent track record of reliable performance, and our leasing success and lower vacancies are clear indicators of an attractive and sustainable portfolio.”

He adds, “During this period of change, we remain focused on fundamentals and managing the elements within our control. As a diversified fund, Emira has several levers at our disposal, all of which are working well to ensure that we are stable, have lower risk and are attractive to the market.”

When it comes to capital allocation, Emira’s diversified portfolio is balanced to deliver stability and sustainability through different cycles with a mix of assets across sectors and geographies, and through direct property holdings and indirect property investments with specialist third-party co-investors.

In South Africa, Emira’s portfolio includes commercial – retail, office and industrial – and residential assets. Now, 18% of Emira’s asset base is made up of equity investments in 12 grocery-anchored open-air convenience shopping centres in the better-performing and stable economy of the USA, investing with US-based partner The Rainier Companies. Emira’s US investment provides a buffer to current global uncertainty and the low-growth domestic environment.

Despite a shorter-than-usual reporting period, Emira made lengthy strides in strategic capital recycling. It gained control of the specialist residential REIT Transcend Property Fund, consolidating it in October 2022 and boosting its exposure to the defensive residential property sector. It also prepared to finally transfer its holding in retail property venture Enyuka Property Fund to co-investor One Property Holdings.

Emira’s portfolio composition changed noticeably in the nine months. The Transcend consolidation saw Emira’s directly held portfolio increase from 74 assets to 94 worth R12.1bn.

Residential rental assets increased from one to 23 properties – 20% of Emira’s directly held SA portfolio. Emira also gained direct access to residential assets in Cape Town for the first time. The portfolio totalled 4,315 units split between Gauteng’s (85% by value) and Cape Town’s (15%) high-demand areas, available at rentals from R4,500 to R8,000/pm per unit, which are popular with the low-to-middle income segment of the affordable property market. With a 2.6% vacancy and slow but steady rental growth, the defensive portfolio is poised to contribute consistently to Emira’s revenue.

Its direct commercial portfolio is split between urban retail (41% of directly held SA portfolio value), office (24%) and industrial (15%), and continued to benefit from this diversification. Vacancies improved from 5.3% to 4.7% over the nine months, with all sector vacancies well below the applicable benchmarks. Rental collections were 101.6%.

Its 17-property strong retail portfolio of primarily grocery-anchored neighbourhood centres is trading well with improved metrics despite headwinds for retailers and shoppers alike. The total weighted average rental reversion lifted from -13.0% to -5.5%. Tenant retention was 88%. Retailer trading densities grew 4.5% in the nine months.

Emira’s diversified industrial portfolio of 34 properties delivered a stable and defensive performance, notwithstanding SA’s unprecedented rolling power cuts and the major impact they have on the industry. Portfolio vacancies decreased from 2.7% to 2.1%, 79.1% of maturing leases were renewed and rental reversions improved from -20.1% to -6.5%.

Improved office vacancies moved down from 15.0% to 12.5% despite the challenging and uncertain environment from its portfolio of 20 mainly P- and A-grade properties, even with depressed fundamentals in this sector.

The commercial portfolio benefitted from R146.5m in tactical upgrades, many of these focused on energy efficiency,  solar plants and installing backup power in response to South Africa’s electricity crisis.

Emira’s ESG strategy supports the sustainability of Emira’s properties by prioritising energy efficiency, water conservation, and biodiversity. Our energy efficiency improvements and renewable solar power drives have accelerated into top gear in response to increased load shedding. These initiatives help manage risks to energy and water security and the environment. Decreasing energy and water security, along with rising costs for rates, taxes, and utilities pose major risks for the entire property sector,” notes Jennett.

Around 79% of the gross lettable area in Emira’s commercial portfolio has full backup power, including tenant generators. With the increased need for backup power, Emira’s diesel costs rose substantially for the nine months to R27m from R4.9m for the prior 12 months. Emira recovered 84% of these costs.

“Loadshedding increases the cost of doing business, intensifying the risk of tenant defaults and business failure,” cautions Jennett.

Taking its utilities mix and management even further, Emira is exploring new ways to assist its tenants in reducing their total cost of occupation and combating the significant costs associated with load shedding. Battery solutions and wheeling energy produced by independent suppliers are among the alternatives being considered.

In the US, Emira’s 12 equity investments — grocery-anchored dominant value-oriented power centres — total R2.7bn (USD151.9m). The gradual but consistent positive growth in the US economy and low unemployment (3.5%) supports Emira’s investment in US open-air centres with a high-quality tenant base focused on popular value retail and essential goods and services. It selects robust markets with sound property fundamentals.

US portfolio vacancies were reduced from 4.5% to 2.6%, with positive rental reversions of 7.9% and an extended portfolio lease expiry profile of 5.6 years. It delivered an even better-than-anticipated performance to add R176.m to Emira’s distributable income.

This is mostly due to our latest acquisition, Summit Woods, contributing for the full nine months and the meaningful ZAR weakening against the USD during the period,” reports Jennett.

Emira’s balance sheet remains healthy with a more than adequate 2.9x interest cover ratio, unutilised debt facilities of R376.2m and cash-on-hand of R125.0m. Emira’s loan-to-value ratio was temporarily elevated at 44% as its strategic initiatives play out and it is expected to materially reduce as further strategic actions are completed. Emira benefits from diversified funding and has facilities across all major SA banks and access to debt capital markets. Its debt metrics remain comfortably within covenant levels. During the period, GCR affirmed Emira’s corporate long-term credit rating of A(ZA) and corporate short-term rating of A1(ZA), with a stable outlook.

Jennett concludes, “By continuing to focus on its strategic direction, operational excellence and portfolio-enhancing capital recycling, Emira has done well for all its stakeholders. As we move forward in a global economic slowdown with rising inflation, higher interest rates, major local electricity supply problems, and the resultant broadly weaker SA commercial property market, we are committed to continuing to execute property fundamentals with distinction and accelerating our capital recycling to further diversify our investments in more stable economies with better growth prospects.”

Property sector embraces benefits, positive impact of technology as business enabler

The South African real estate sector is experiencing a transformative shift as it embraces technology as a vital tool for business growth and efficiency, according to a report released by the South African Property Owners Association (SAPOA). Recognising technology’s positive impact and benefits, industry players are adopting proptech solutions to catch up with their global counterparts.

The comprehensive overview of the proptech market in South Africa was compiled in collaboration with SA REIT Association, and the Green Building Council South Africa (GBCSA) and aims to create greater awareness of how technology is reshaping the local and global property sectors.

The report highlights that while the South African proptech market has been slower in adopting emerging technologies compared to global markets, there has been a significant expansion of proptech companies offering a wide array of services across the industry. With over 150 proptech companies currently serving the South African market, the breadth of innovative products has grown substantially.

However, technology adoption in the sector has faced challenges due to tough economic conditions, unstable infrastructure, developing logistics networks, and a lagging focus on environmental, social, and governance (ESG) regulations. Consequently, traditional early-stage capital sources have been relatively underfunded in driving innovation. Nevertheless, signs of maturity are beginning to emerge in the market.

The report notes that corporate executives and key role players increasingly recognise the positive impact technology can have on their organisations. More real estate companies are investing in new product innovation to meet the evolving needs of their portfolios, either through direct investment or indirect partnerships.

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Joanne Solomon, CEO of the SA REIT Association (right), points out that entrepreneurs within the property sector are establishing new technologies, leveraging their intimate understanding of industry challenges and solutions. Solomon further highlights the establishment of dedicated associations and industry sub-committees supporting growth, such as the SAPOA Proptech Committee, SA Proptech Association, Africa Proptech Association, and the Africa Proptech Forum, as evidence of the sector’s maturation.

The report also underscores the growing interest in investment prospects within the sector, with successful fundraising rounds and exits for select South African-based proptech companies. The current technology products catering to the South African property market address efficiencies across sub-sectors and the asset life-cycle, driving increasing competition within product categories.

Joanne Solomon emphasises the potential of proptech to bring numerous efficiencies to the South African property sector. These include increased automation, improved data analysis, and enhanced communication with tenants and investors. Proptech’s adoption can lead to better decision-making, reduced costs, increased building occupancy, and ultimately higher shareholder returns.

Lisa Reynolds, CEO of the Green Building Council South Africa, adds that proptech, with its innovative technologies, aligns seamlessly with the property sector’s sustainability goals and will play a critical role in achieving green building objectives.

The South African property sector’s enthusiastic embrace of technology as a business enabler signifies a significant shift towards a more efficient, sustainable, and digitally advanced future. With ongoing collaboration among industry stakeholders and the increasing adoption of proptech solutions, South Africa’s real estate sector is poised for remarkable growth and transformation.

“We are excited to witness the growing recognition of proptech’s potential. Our primary focus lies in harnessing technology to deliver tangible and positive outcomes for real estate owners, developers, managers and end users. By leveraging advanced technologies, businesses are embracing enhanced automation, data-driven insights, and seamless stakeholder communication, paving the way for increased efficiency and innovation within the South African property sector. Embracing proptech empowers informed decision-making, cost reduction, higher occupancy rates, and ultimately greater potential returns for shareholders,” says Peter Clark, Managing Partner at REdimension Capital who wrote the report.

Fairvest Ltd: Interim results indicate robust operational performance despite economic headwinds

Fairvest Limited announced its interim results with a dividend equal to 100% of distributable income of 64.60 cents per A share and 20.97 cents per B share.

Fairvest is a South African Real Estate Investment Trust (“REIT”) listed on the JSE and A2X exchanges, holding an R11.9 billion diversified portfolio of retail, office and industrial properties across all nine provinces of South Africa. The Fairvest team continues to perform in a tough environment by responding and adapting to the rapidly changing environment.

The merger between Arrowhead Properties Limited and Fairvest Property Holdings Limited was successfully implemented during the 2022 financial period. Focused on transitioning to a convenience retail portfolio while creating long-term shareholder value. Fairvest Limited has 137 assets, gross lettable area (“GLA”) 1 127 134m2 with an average property value of R87.2 million, with 51% of the properties in Gauteng by GLA. The portfolio comprises 67% retail, 22% office and 11% industrial by revenue. The Group also holds a 60.9% interest in Indluplace Properties Limited (“Indluplace”) and owns a portfolio of residential properties and a 5.1% interest in Dipula Income Fund Limited.

Fairvest CEO Darren Wilder said the weak South African economy, higher interest rates and sustained load shedding had continued the challenging operating environment during the reporting period. Despite these impediments, Fairvest continues to successfully implement the strategic objectives of the Group by de-risking the balance sheet, reducing vacancies and disposing of non-core assets. He said Fairvest had made excellent progress by achieving like-for-like net property income growth across all sectors, disposing of four properties with a
further ten transacted. He said that Fairvest is operationally strong and well-positioned for the challenges ahead.


Despite the significant economic challenges, Fairvest has effectively concentrated its efforts on enhancing letting activity while delivering promising results. “Despite these circumstances, the business has shown resilience with like-for-like net property income growth of 5.0%,” added Wilder.

The Group reported robust rental reversions on the 81,505m2 that were renewed or relet, with a positive 1.8% overall reversion, with the retail sector at positive 2.3%, the industrial sector at positive 4.3%, and an improving but still negative 1.3% in the office sector. 90.7% of tenants that were up for renewal were renewed or relet. On a like-for-like basis, net property income increased by 5.0%, with a 3.5% increase in the retail sector, a 5.2% increase in the office sector and a 14.9% increase in the industrial sector.

Currently, the portfolio’s weighted average lease escalation improved from 6.4% to 6.6% as the Group moves closer to its strategic objective of escalations above 7%. The weighted average monthly rental per m² per sector of R151.80 for retail, R114.00 for office and R48.02 for industrial. The weighted average lease expiry was 26 months.

During the review period, Fairvest has effectively managed to maintain an overall vacancy rate of 5.96%. Dissecting this further, the retail sector was at 4.3%, the office sector at 13.9%, and the industrial sector reported a marginal 1.5% vacancy rate. The leasing team at Fairvest has strategically prioritized reducing vacancies across all sectors, with a special emphasis on the office sector.


In line with their communicated strategy at the time of the merger with Arrowhead, Fairvest is actively realigning its portfolio, primarily focusing on retail assets.

During the reporting period, SA Corporate Real Estate Limited (“SA Corporate”) announced a firm intention to acquire all the issued shares of Indluplace for R3.40 per share.

Fairvest provided a binding commitment to SA Corporate to vote in favour of the scheme for its 61% shareholding. Fairvest expects the R651.4 million proceeds from the disposal to initially be allocated to floating rate debt, which will reduce the Group LTV to approximately 33%. This anticipated disposal marks significant progress in Fairvest’s strategic realignment by disposing of their residential investment.

During the period under review, the Group sold four assets for R252.5 million at an average premium to book value of 0.2% at an average yield of 11.2%. A further three assets valued at R85.5 million were transferred during May 2023, with a further seven assets worth R356.6 million have been sold and are still to be transferred, subject to conditions precedent. “These assets were identified as non-core. We have managed, on an ongoing basis, to continue to sell assets to our network of buyers,” said Darren Wilder.

Debt funding

The Group has debt of R4.8 billion which represents an LTV ratio of 38.4%, a marginal increase since September 2022. The weighted average interest rate for the period ended was 9.2% (Sep-22: 8.9%), increasing in line with the South African Reserve Bank repo rate. The Group has maintained the interest cover ratio at 2.5 times, which is well in excess of two times the cover required by its funders.

Jacques Kriel
Jacques Kriel, Fairvest Ltd CFO

The Group has entered into interest rate swaps of R3.4 billion to hedge 71.1% of total debt. Further cash on hand and undrawn debt facilities of approximately R360.4 million at the period end provide further headroom to execute its strategic initiatives, said CFO Jacques Kriel.

The Group commenced a debt syndication process, which closed after the end of the reporting period. Demand from all the major banks was high, with credit-approved bids received nearly three times the debt offered. R2.1 billion of new debt were secured, with a weighted average maturity in excess of three years. All debt maturing in the next 12 months will be refinanced through this process and is expected to be finalised in the next six weeks. The margin achieved is a significant improvement to the current weighted average cost of funding.

Environmental, Social and Governance (ESG) Projects

Fairvest’s CEO, Darren Wilder, confirmed that the Group is implementing an integrated backup power strategy in response to the recent severe load shedding. This backup power strategy encompasses investigating transitioning from on-grid to off-grid or semi-off-grid solar systems. It also includes utilising advanced technology such as fuel-saving equipment, batteries, and expanded generator capacities, all aimed at maintaining business continuity in adverse conditions.

Currently, the Group operates 47 generators, accounting for 11.9 MVA of installed capacity. This provision allows 42% of the portfolio to benefit from partial or full backup power. Over six months, Fairvest spent R8.3 million on diesel, recovering R7.2 million.

Fairvest remains committed to enhancing its portfolio, as indicated by a capital expenditure of R91.2 million, of which R10.3 million was allocated towards further solar initiatives. The Group has 38 fully functional solar plants with an installed capacity of 16.4 MWp. During the six months, these solar plants contributed to 11.7% of the portfolio’s total electricity demand, yielding clean energy worth R16.6 million. We have a further 12 approved plants in various stages of implementation, which will add 7.6MWp capacity.

The strategic implementation of smart monitoring equipment at 12 locations for early leak detection marks a significant stride, complementing the existing 13 operational groundwater harvesting plants.


Looking ahead, Fairvest’s focus for the remainder of the fiscal year will be on further reducing vacancies, optimising operational efficiencies, and capitalising on the synergies emerging from the merger. On a like-for-like basis, we expect growth across all sectors.

Fairvest anticipates distributable earnings per B share for the complete financial year to range between 40.50 and 42.00 cents per share. In accordance with the Group’s memorandum of incorporation, the distribution per A share is set to rise by the lesser of 5% or the most recent Consumer Price Index.

The Board has resolved to maintain the current 100% dividend payout ratio of distributable earnings.