CAPE TOWN - Octodec Investments’ cash resources and undrawn banking facilities amounted to more than R600million at the end of the six months to February 29 and the JSE-listed real estate investment trust (Reit) was comfortable with its liquidity position, managing director Jeffrey Wapnick said yesterday.
The group reported a slight decline in distributable income to 97cents a share in the period, which he said was a satisfactory performance considering the rapidly deteriorating economic environment and this was an indication of the group’s resilience.
The board decided not to declare a dividend to bolster the cash position as the group prepared to face uncertain circumstances, worsened by the Covid-19 crisis.
The dividend would be reviewed closer to financial year-end, he said.
Total rental income grew by R29.6m, 3percent, compared to the prior year, despite recessionary conditions placing strain on tenants.
The core portfolio, represented by those properties held since the previous comparable period, with no major development activity, reflected like-for-like rental income growth of 2.2percent in the interim period.
Property costs increased mainly due to rising repairs and maintenance costs. The Park, a community shopping centre in Tshwane, received a fresh modern look, attracting new tenants including Pick * Pay Clothing, Ackermans, Gadgets Galore and an improved food offering.
“We are satisfied with the reasonable performance. Some progress was made towards strategic objectives, particularly the reduction of commercial vacancies, completion of value-enhancing smaller upgrades, recycling of capital through the sale of non-core assets and the successful negotiations for the signing of our government leases, with 18 concluded just post-period end,” said Wapnick.
He added that Covid-19 had brought many challenges, chief among them uncertainty. The situation had required swift responses from management led by a Covid-19 task team to ensure business continuity.
Apart from new health and safety measures, strategy had been refocused around strengthening the balance sheet and bolstering cash resources.
Occupancy levels were stable during the interim period, with total and core vacancies of 17.9percent and 11.7percent, respectively.
Reduced vacancies were achieved across all of the commercial sectors with the most notable being in the industrial and shopping centre portfolios.
Occupancy levels in the residential sector, which were impacted by reduced tenant affordability and increased competition in the Joburg CBD, were a key focus with various value-adding initiatives introduced to improve uptake in the later part of the first half.
Octodec sold nine assets in the period valued at R145m, at a combined premium to book. Proceeds were used to pay down debt and support upgrades.
“We have always taken a prudent approach to managing our capital and took advantage of attractive interest rates to increase our hedged position and reduce interest rate risk. We also addressed short-term loan expiries and entered into discussions with alternative funders to diversify our funder profile. Post-period end, we secured loan facilities with Absa totalling R450m,” he said.