However, Octodec managing director Jeffrey Wapnick stressed on Tuesday that the company’s planned geographic diversification still required board approval.
He said Octodec needed to do “its homework” before diversifying and would want to know any new region it expanded into equally well as Pretoria and Johannesburg. He declined to identify its planned target for expansion.
“We are negotiating for acquisitions in the area and (if it was to be known) it would affect the purchase price. The wheels are turning now and we have done our homework and are happy for our board to give the go-ahead or say no,” he said.
Wapnick said the residential opportunities being considered outside Gauteng would be pursued by leveraging Octodec’s existing relationships and expertise.
But Wapnick said Octodec would probably embark on the planned residential expansion by itself and not with a partner. He said that they had identified one or two people who could do the residential management for Octodec and if it grew large enough they would then manage it themselves.
Octodec on Tuesday reported a 6.5 percent growth in total distributions to 104.8 cents for the six months to February from 98.4c in the previous corresponding period.
Like-for-like rental income increased by 5.5 percent.
Wapnick said Octodec’s diversified portfolio had shown resilience in the current challenging environment, which it believed was attributable to its quality, value for money offering aimed at the growing middle market.
“Our rental income showed steady growth and the successful optimisation of our portfolio through upgrades to certain properties and disposal of non-core properties contributed to the growth achieved,” he said.
Rental income from offices showed the strongest growth at 8.2 percent, which was largely attributable to the leases concluded last year for the Centre Walk offices in Tshwane.
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He said the residential portfolio showed lower growth in like-for-like rental income at 3.8 percent.
Wapnick attributed this largely to lower escalations of rentals in Hatfield and the Tshwane central business district. The ratio of net property expenses to rental income remained unchanged at 29.6 percent.
Vacancies in the Octodec portfolio, comprising 316 properties valued at R12.7 billion, increased to 16.8 percent from 15.6 percent in August. Core vacancies, which exclude the gross lettable area of properties held for development and those that were being redeveloped, increased to 10.1 percent from 9.8 percent in August.
Octodec disposed of 12 non-core properties for a total of R87.1 million in the reporting period and has identified an additional 42 non-core properties with a carrying value of R263 million for sale.
Wapnick stressed these were properties outside “our zone” and in areas such as Pretoria North, Pretoria West, Gezina or Silverton.
Octodec is planning two new residential property developments, Reinsurance House in Johannesburg and Van Riebeeck Medical Building in Pretoria, at an anticipated total cost of about R240 million.
Shares in Octodec declined 1.38 percent on the JSE to close at R23.50.