Octodec increases distributions by 6,2%

Jeffrey Wapnick‚ managing director of the company‚ credited the solid performance to the re-development of properties in its portfolio.

He said that consumers who support retail centres, particularly those in the central business districts‚ are mostly government workers or students and these consumers are proving more resilient to current economic pressures.

Wapnick says the company is comfortable with its growth in distributions per linked unit for the next year should be at least on par with the sector average of around 6% to 7%.

Octodec invests in the retail‚ industrial and office property and has a small residential property investment component in its portfolio.

Octodec says its balance sheet was enhanced by a R300m rights issue in August 2012 when 18‚927‚445 new linked units were issued at R15‚85 each.

"While Octodec's 6.2% distribution growth is higher than the consensus forecast‚ it would have been around 11% before the rights issue's diluting effect.

Importantly‚ the capital provides a war-chest for the company to expand its property portfolio by buying properties or re-developing existing ones‚" said Wapnick who confirmed the company was on an acquisition drive.

The successful rights issue helped decrease Octodec's gearing from 39% to 33% of its total investment portfolio value.

With total investments of R3.6bn‚ Octodec grew its net asset value by 4.6% to 1‚882 cents per linked unit during the year. The valuation of its property assets increased 6.1%‚ by R163.5m‚ to R2.92bn.

Octodec's unit price increased from R15.95 to R19.02 at the end of August this year‚ giving investors a capital growth of 19.2%. The distribution of 137.30 cents per linked unit accounts for an income yield of 8.7%‚ with a total return of 27.9%.

Octodec's investment in associate property company IPS continued to deliver a positive performance for investor's with its profits increasing to R17m, up 34% on the previous year. Over 50% of IPS's investment is in residential property.

Despite rapidly rising rates and utilities charges‚ which place a strain on tenants' occupancy costs‚ Octodec's cost recovery percentage from tenants remained constant during the year. Total occupancy levels were up by 3% across its entire portfolio.

Its retail centre vacancies are at a low of 0.2% of total lettable area with significant improvements in the occupancy levels at Gezina and Killarney Mall.

"Our investment in the upgrade and re-leasing of Killarney Mall is showing positive results. It is essentially fully let and revenue from the mall grew by 9%‚" said Wapnick.

Octodec's residential vacancies are below 1% of total lettable area and office vacancies reduced to 6.9%. Industrial and high-street shop vacancies are both below 3%.

Core vacancies‚ which exclude vacant land for current and future re-developments‚ amount to 7.4%‚ down from 8.8% at the end of 2011.

During the year‚ Octodec bought and transferred three properties at an aggregate purchase price of R216‚2m‚ providing an average weighted yield of 9‚6%. These properties are The Tannery Industrial Park and FNB Centurion in Pretoria and Shoprite in Eloff Street‚ Johannesburg.