Emira Property Fund says its SA portfolio remains resilient despite the tough operating environment, with vacancies continuing to decline.
For the five months ended August 31, SA portfolio vacancies improved from 4.7% in March to 4.3%, with 83% of leases that matured during the period retained when measured by gross lettable area.
“However, higher interest rates, inflationary pressures and ongoing load-shedding are affecting consumer spending and business confidence, but diversification should continue to safeguard the fund,” the company said in a pre-close operational update.
Emira said tenant retention and attracting new ones is costly, with weighted average total reversions at -5.5% compared with -8.4% in March.
Emira’s weighted average lease expiry is 2.6 years with average annual lease escalations of 6.5%.
JSE-listed Emira owns a mix of directly held retail, office, industrial and residential assets, as well as investments in Transcend Property Fund in SA.
About one-fifth of the company’s asset base comprises investments in 12 grocery-anchored open-air convenience shopping centres in the US, providing a buffer against the global economic uncertainty amid high inflation and interest rates, and poor economic growth in SA.
Vacancies in its industrial portfolio fell to 0.6% from 2.1% in March, with 86.9% of maturing leases retained when measured by gross rent.
Emira said its 33 single-tenanted light industrial and warehouse facilities and multi-tenant midi- and mini-unit industrial parks remain defensive with steady demand for space.
However, the retail portfolio’s vacancy rate edged up to 3.3% from 3.1%, while trading densities and footfall increased by 4% and 4.8%, respectively.
Office vacancies rose from 12.5% to 12.7% with weighted average reversions improving to -7.5% from -14.8%. The fund, which owns 20 office assets, mainly premium and A-grade, said the sector’s fundamentals remain depressed as a result of the sluggish economy.
Vacancies in the US portfolio also increased, to 3.9% from 2.6%.
Emira’s gearing ratio declined from 44% to 42% due to the disposal of Enyuka as well as unutilised debt facilities of R845m and R132m cash.
The fund will release its financial statements for the six months to end-September on November 16.
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