Retail-focused property group Safari Investments is investing in and trying to find alternative water and electricity sources to ensure its portfolio can operate during load-shedding following some of the worst power cuts on record.
“Boreholes and backup water systems have been successfully installed at [the] Thabong and Nkomo Village Shopping Centres to reduce operational costs and improve our resilience against water shortages and supply risks,” Safari, a real estate investment trust (Reit), said on Thursday in its half-year results to end-September.
The company, valued at R1.8bn on the JSE, has installed solar power systems at several of its properties while management considers options on how to integrate generators into existing solar systems to make it more efficient and save costs for tenants.
Businesses have had to adapt to constant power cuts as there appears to be no end to the troubles at state power utility Eskom.
Despite this, Safari’s property revenue climbed almost one-tenth year on year to R192m because of normal annual rent hikes.
Headline earnings, a profit measure that strips out impairments and one-off items, jumped 38.9% to R97.8m.
Its distribution per share rose close to one-third to 33c, and Safari is confident it will be 6%-10% higher for the full financial year.
Net operating profit jumped more than one-fifth off a lower base following the civil unrest in Gauteng and KwaZulu-Natal in July 2021 and the associated rental relief subsequently provided to the affected tenants.
Safari wants to dispose of certain assets as parts of its strategy to grow a specialised retail portfolio, including selling the Soweto Day Hospital, the Mnandi Shopping Centre in Atteridgeville in the west of Pretoria, and mixed-used development Platz am Meer in Swakopmund, Namibia.
“The liquidation process for the tenant occupying Soweto Day Hospital has formally commenced. Mnandi is actively being marketed. The sale transaction will be subject to required conditions precedent and board approval,” Safari said.
Platz am Meer has been sold and is being transferred to the new owner. Another six residential apartments on the property were sold and transferred during the reporting period.
Its portfolio, valued at R3.5bn, has a gross lettable area (GLA) of 175,167m², about the size of 24 football pitches, which include shopping centres in semiurban areas.
The total occupancy rate dipped by 94 percentage points to 97.09%.
Meanwhile, it remains to be seen if property group Heriot’s unconditional offer of R5.60 a share for Safari will be successful after Heriot Investments Proprietary and its related parties, Heriot Reit and Reya Gola Investments, upped its stake in Safari to 37.49%.
According to the Companies Act, a holding of 35% requires a mandatory offer to be made to the remaining shareholders.
Heriot also owns retail centres in CBDs, townships and rural areas that focus on the mass market, as well as office assets.
Merger talks between the two in 2020 had failed to get enough backing from Safari shareholders.
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