Octodec pays final dividend after strong performance from Gauteng portfolio

The Fields, Tshwane was negatively impacted by the reduction in the monthly National Student Financial Aid Scheme allowance to students.

The Fields, Tshwane was negatively impacted by the reduction in the monthly National Student Financial Aid Scheme allowance to students.

Published Nov 2, 2023


Octodec Investments lifted its dividend 3.8% to 135 cents per share for the year to August 31 from 130c following a strong letting performance from its Tshwane and Joburg CBD residential portfolio and sustained interest from retailers in the group’s buildings, managing director Jeffrey Wapnick said yesterday.

Rental income increased to R1.99 billion from R1.93bn. Cash from operating activities before dividend payment increased to R447.2 million from R391.1m. Distributable income per share fell to 171.2c from 175.1c.

Chief financial officer Anabel Vieira said their dividend policy was unchanged and one of the factors they considered was market expectations, apart from group liquidity, balance sheet strength and capital commitments, and they hoped the market would be happy with the dividend.

Wapnick said in an online interview he was proud of their residential and commercial leasing team efforts “in what has been a robust period of letting activity”.

“These results, coupled with sustained interest from large national retailers in our well-maintained and well-located buildings, suggest Tshwane and Johannesburg remain in demand and bustling with activity for residents, office workers and retail customers,” he said.

He said they had done “extremely well” to limit property cost increases to 5.3% year-on-year, in an “exceptionally challenging operating environment”.

Octodec’s residential portfolio, which accounts for 34% of the total portfolio by income and 27.3% of the portfolio by gross lettable area, was the standout performer with income increasing 10.2% year-on-year off good occupancy levels and increased rentals.

Excluding The Fields, which was negatively impacted by the reduction in the monthly National Student Financial Aid Scheme (NSFAS) allowance to students, residential vacancies had dropped to near pre-Covid levels of 5%.

Octodec’s portfolio of retail shopping centres saw rental income increase by 5.3% year-on-year and the group was confident this sector would continue to perform strongly into the new financial year.

Retail vacancies lowered slightly to 6.8%, however excluding Killarney Mall, which has higher vacancies, vacancies in this sector reached an all-time low of 0.4%.

The industrial portfolio experienced rental growth of 3.8%, and 8.6% on a like-for-like basis. However, vacancies increased from 6.8% to 8.7% largely due to several large pockets of space in the Tshwane West and Silverton becoming vacant at year-end.

The pipeline of interest for space, however, remained strong, and the group was confident this sector would see improvement in occupancies going forward.

Core office vacancies remained stable relative to the 2022 financial year, with most large leases being renewed. Rental income however reduced 5.3%, due to two significant negative government rental reversions.

However, the rest of the government leases were renewed at a 6% escalation plus operating costs, which was previously not recovered from the government.

Wapnick said he was confident about prospects for the new financial year for the group, barring any further unforeseen or “black swan” events that might impact the economy.

Octodec refurbished the common and entertainment areas at Vuselela Place in Johannesburg and it built a play and recreational area at Steyn’s Place in Tshwane.

In addition, the Shoprite development in the Tshwane CBD was completed, with the remainder of phase two to be completed in the 2024 financial year.

The flagship conversion of HealthConnect (previously a vacant office building) adjacent to Louis Pasteur Medical Centre, into medical suites, was anticipated to be completed in January 2024.