Retail-focused property group Safari Investments reported higher-than forecast annual payout despite a bigger uptick in vacancies, thanks to a jump in operating profit and insurers settling insurance claims related to Covid-19 and riots.
The company, which is valued at R1.4bn on the JSE, declared a 14% increase in distribution to 65c a share for the year to end-March — a payout ratio of 100% — while operating profit rose 15.4% to R282.8m.
The owner of properties in SA and one in Namibia, aims to maintain the 100% payout ratio in the new financial year notwithstanding SA’s moribund economy, persistently high inflation, interest rates and load-shedding.
“We do remain concerned about the excessive increase in municipal rates and taxes within our tenants’ occupation costs and the continued decline in infrastructure and poor service delivery by most local municipalities,” CEO Dirk Engelbrecht said in the group’s annual report.
Safari is still looking to sell its Soweto Day Hospital, the Mnandi Mall in Atteridgeville in Pretoria and the mixed-used development Platz am Meer in Swakopmund, Namibia, as part of its strategy to become a specialised retail portfolio.
The company is in talks with possible buyers for the Mnandi Mall, while it entered a five-year lease agreement with Elements Africa for the Soweto Day Hospital, with the option to buy subject to approval from the department of health.
Talks with potential investors in SA and Namibia to buy Platz am Meer are continuing, while offers to purchase the last remaining apartments have been received.
“The occupancy level at Platz am Meer is a specific and urgent focus area, and significant progress has been made in recent months towards securing national tenants within the coming months. We project a significant improvement in occupancy through the next financial year,” Engelbrecht said.
The group’s portfolio, valued at R3.75bn, includes the Denlyn Mall in Mamelodi and the Atlyn Shopping Centre in Atteridgeville, both in Pretoria.
Most of its portfolio — which has a gross lettable area of 178,460m² or about the size of 25 soccer pitches — is in Gauteng, along with one in Limpopo and one in Namibia.
Net asset value (NAV) per share improved 6.9% to R9.43.
Property revenue improved 7.4% to R392.6m, despite the vacancy level growing 1.35 percentage points to 3.25%, as the monthly weighted average gross rental per m² improved by R7 to R158 per m².
Vacancies increased because of the conversion of the SuperSpar at Thabong Mall in Sebokeng to Shoprite and Shoprite Liquor stores, which will start trading in October 2023.
Property expenses as a percentage of property revenue edged one percentage point higher to 27%.
The group’s total debt was reduced by 0.4% to R1.3bn.
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