Octodec Investments raised its dividend by 160% in the year to August 31. Picture: file
Octodec Investments raised its dividend by 160% in the year to August 31 after vacancies in its city residential and industrial sectors fell substantially, with the residential portfolio in particular performing ahead of expectations.
The improving performance of the group following dark days during the pandemic also sent the share price soaring from 7.73% to R9.75 on the JSE yesterday morning.
In addition, “although there has been a continued downward resetting of rentals across most sectors, from our perspective, several renewals are being concluded at increased rentals, and demand for space in both Johannesburg and Tshwane CBDs remains strong,” CEO Jeffery Wapnick said in an online interview yesterday.
Distributable taxed income increased 30.0% to R466.1 million. A final dividend of 80 cents per share was declared, with a total dividend of 130 cents for the full year ,160% higher than last year’s 50 cents.
Commenting on the higher dividend, Wapnick said as an owner of the shares, the dividend was much improved, although not yet at pre-pandemic levels.
He said the dividend was made possible because the business had shifted in the past financial year, and “the big mover is in our residential portfolio, where the vacancy rate has reduced to 6% from 15%.”
Wapnick said when the pandemic started, many tenants in their apartments in the CBD’s of Johannesburg and Tshwane lost jobs, and “went home.” After the pandemic lifted, they returned to the city. Much the same happened with student tenants, who were mainly back at class after working remotely during the pandemic.
Residential income increased 7.6% year on year due to the return of students to universities for in-person classes, and increased activity at OR Tambo Airport which benefited letting activity at Kempton Place.
Initiatives such as shared and furnished accommodation at some residential buildings, and value-added services such as complimentary Wi-Fi, helped to attract an “impressive 33% increase in leasing enquiries. We intend to accelerate the rollout of these offerings to more residential buildings,” Wapnick said.
He said the focus would now change to increasing rentals per unit while being cautious of the impact high inflation and increased interest rates will have on the disposable income of tenants.
Retail shopping centres performed well, with positive reversions on new leases and renewals. Rental income from Octodec’s shopping centres increased 5.9%. However, the first half was still impacted by lockdown restrictions and street shops experienced subdued activity, and a slight increase in vacancies.
“We continue to see renewed confidence from large national retailers to sign extended leases for larger pockets of space and willingness to test the CBD market with brands previously only found in malls,” said Wapnick.
In the office portfolio, the oversupply in the major cities, due to hybrid or work-from-home models, continued to put pressure on occupancy levels, in line with the broader sector trend. Rental income in the office sector decreased by 1.3% year on year.
Despite general rental pressure in the industrial sector, occupancy improved considerably, with a number of Octodec’s industrial buildings being 100% occupied..
Many new enquiries were received, and there was improved collections from places of worship and some colleges within the specialised portfolio.
Octodec sold 20 properties for R218.4m through the year, and more properties were likely to be be sold during the new financial year to improve the efficiency of the portfolio, said Wapnick
He said that the property sector as a whole faced headwinds, including poor municipal service delivery, rising inflation, increased utilities costs and high-interest rates, but “we are confident Octodec is well positioned…to benefit from a medium-to-long term economic recovery.”
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