JSE-listed SA Corporate Real Estate’s industrial property portfolio recorded 2.2% like-for-like net profit income (NPI) for the six months ended June.
“The industrial property portfolio remains resilient with strong rental growth from escalating leases,” said CEO Rory Mackey during a pre-close presentation on Friday.
SA Corporate is JSE-listed real-estate investment trust (Reit), which owns a diversified property portfolio in SA and Zambia.
In its 2022 financial year released in March, the industrial property portfolio accounted for more than 23% of the SA portfolio from over 23% in 2021. Like-for-like net property income had increased from 1.4% in 2021 to 2.4% in 2022, recording rental escalations of 6.4% and -3.1% rental reversions.
Mackey said the portfolio was fully let with less than 1% of unlet space relating to the office component, with a tenant retention rate of more than 77%.
The company anticipates renewal rental reversions to turn positive of about 2.9% at the end of June 2023.
However, SA Corporate forecasts that renewals will be -6.4% for the second half of 2023, with about 30% negative reversions expected from showrooms at the 33 Ontdekkers motor showroom in Gauteng and -7.9% reversion at 153 Old Main Road motor showroom in KwaZulu-Natal.
Its convenience orientated retail portfolio recorded a lower like-for-like net property income growth of 1.2% resulting from about R3.6m developments at Coachmans Crossing, Montana and Musgrave malls.
During the reporting period, diesel costs to power generators were R6.2m, of which 57% is recoverable from tenants.
Leasing initiatives and tenant remixes has seen vacancies fall slightly from 3.2% in December to 3.1% in June, with tenant retention decreasing from 84.2% to 78.4%.
Mackey said the company continues to relook its tenant mixes in line with shopper demand — as a result — space previously let to Ster-Kinekor at Musgrave in Durban was not renewed giving way to Checkers redevelopment.
At Bluff Towers and Umlazi Mega City, space previously let to the Post Office was replaced with fashion tenants, and those initiatives have contributed to the decline in the tenant retention rate at the end of June.
Mackey said redevelopments and extensions initiatives at some of its retail centres has seen national tenants increasing from 63.3% in December to 66.5%, with convenience offerings increasing from 59.2% to 63.1%.
He said the R1.1bn 2023 disposal programme was progressing well, with about R261m in disposals so far including two motor dealerships, an office and industrial property, and noncore residential apartments earmarked for sale at 9.2% exit yield.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.