Roy Cokayne
OCTODEC, the listed property company, has approved a project to convert an office block in Pretoria’s central business district (CBD) into 400 apartments plus 6 000 square metres of retail space at a cost of R330 million.
Managing director Jeffrey Wapnick, said yesterday that the conversion of Centre Forum in Struben Street would begin shortly. Meanwhile, the planning and design of two other projects involving an investment of R500m was far advanced, but not yet approved.
He said these two planned projects involved the redevelopment of the Shoprite building at the corner of Helen Joseph and Lilian Ngoyi streets in Pretoria at a cost of R400m, and the conversion of Insurance House in Johannesburg’s CBD from offices into 175 apartments at a cost of R100m.
He said the planned Shoprite development involved redeveloping 4 300m2 of retail space and building 460 residential units.
Wapnick said the City of Tshwane’s new head office was being developed close to the planned project and it was anticipated that there would be strong demand for accommodation from employees.
Octodec, which merged with Premium Properties from September 1, yesterday released its financial results for the year to August, the final financial report prior to the merger.
The company maintained its track record of delivering strong growth in earnings and declared an 11.5 percent increase in dividends a share to 175.7 cents for the year.
Wapnick said strong growth in earnings was supported by a number of successful upgrades during the year and a proactive approach to letting, which mitigated the impact of tough trading conditions and subdued consumer confidence.
He said the growth was partly attributable to contractual escalations, improved letting and increased recovery of utility and assessment rate charges through greater efficiencies and focus on energy management initiatives, while bad debt write-offs and provisions were maintained at 1 percent of total tenant income.
There was a limited improvement in the office and industrial rental markets in the reporting period and a slight decrease in vacancies. But the retail portfolio and shopping centres contributed to the enhanced performance.
The merger of Octodec and Premium Properties resulted in the companies earlier this week declaring a special distribution a share of 87.1c per Octodec linked unit and 81.1c per Premium Properties linked unit.
Wapnick said the bigger balance sheet of the enlarged Octodec would mean it would be able to handle bigger projects.
“Our new developments are attracting positive responses from national retailers looking to service the CBD market and also residential tenants seeking upmarket accommodation.”
Following the merger, Octodec boasts a portfolio of 320 properties spread between the residential, retail, industrial and office sectors valued at about R10.9 billion.
Wapnick expressed confidence that Octodec’s current and future project pipeline would support continued growth in spite of a subdued local economy.
Octodec completed four projects during the year, with two still under construction. The total cost of projects is about R530.8m, of which R155.7m had been spent at year-end.
Wapnick believed that by building on the enlarged Octodec foundation created by the merger, it would be able to grow dividends a share by between 7 percent and 9 percent in the year ahead.
Shares rose 2.02 percent to close at R22.75 yesterday.