Roy Cokayne
OCTODEC Investments has acquired Reinsurance House office block in Johannesburg’s central business district and plans to convert it into 175 residential units at a cost of R68.3 million.
The company’s shares on the JSE yesterday rose 0.78 percent to close at R28.52.
Octodec last year merged with listed Premium Properties and now has the most significant residential property portfolio of any real estate investment trust listed on the JSE.
Jeffrey Wapnick, the chief executive of Octodec, said yesterday that Octodec had acquired a number of smaller properties in the six months to February for a total of R70.6m.
Wapnick said Reinsurance House, which it acquired for R33.5m, was the most significant of these acquisitions.
Octodec would soon have the results from the tender to convert Reinsurance House into residential units and then “either push the button or baulk”.
Wapnick said if the tender was too high it would not make economic sense to convert the office block now but was optimistic about the project proceeding because many contractors were seeking new work.
Octodec yesterday reported a 9.3 percent growth in distributions to 96.8c in the six months to February from 88.6c in the previous corresponding period.
Anthony Stein, the financial director at Octodec, said that there was a significant increase in rental income and expenses but also in the total number of share in issue because of the merger. But there was not any accretive growth in the distributions figure.
Total revenue rose by 200 percent to R808.2m from R269.3m.
According to an internal valuation, Octodec’s portfolio of 320 properties in Gauteng is now worth R10.9 billion.
Stein said the merger had placed Octodec on a stronger footing and also enabled the company to access advantageous funding options to drive its growth strategy through further yield-enhancing upgrades, redevelopments and acquisition opportunities across the portfolio.
Bond programme
Stein said Octodec also increased the size of its bond programme from R1bn to R3bn in March and had further unutilised committed banking facilities amounting to R524m.
Wapnick said four major projects worth about R653.3m were under construction during the period, with R151.8m spent by end-February.
These were the R326.9m Centre Forum greenfield residential development consisting of 400 units, ground floor retail and parking in the Tshwane central business district that is scheduled for completion late next year; the R140.4m 1 on Mutual greenfield mixed-use development situated adjacent to Church Square in the Tshwane central business district comprising 142 residential units, ground floor retail space and parking that will be completed early next year; the R56.7m second phase retail redevelopment at Silver Place in Silverton in Tshwane that is expected to be completed soon; and the R129.3m redevelopment of Bosman Place in the Johannesburg central business district comprising 225 residential units and a residential component that is also nearing completion.