SA Corporate Real Estate, owner of industrial, retail, and residential properties in the major metropolitan areas of South Africa, lifted its distribution to 24.37 cents a share for the year to December 31, from 23.18 cents per share the year before.

The distribution announcement and prospects for the new financial year saw the share price rise 3.19% to R2.91 on Friday. A year ago, the share traded at R2.46.

The REIT’s distribution was at a payout ratio of 90% of distributable income. As at December 31, SA Corp’s portfolio consisted of 267 properties valued at R18 billion in South Africa and exposure to direct and listed property valued at R1.9bn in Zambia.

Distributable income increased 5.1% to R680.9 million or 27.08 cents a share. Total net property income (NPI) came to R1.5bn versus R1.3bn the year before. Total like-for-like NPI increased 6.7% to R1.1bn.

The disposal pipeline since January 2024 came to R908.6m. Traditional portfolio vacancies came to 1.5% of gross lettable area, down from 2% the year before.

Afhco’s residential portfolio vacancies fell to 3% of units versus 4.2% in 2023. Indluplace’s residential vacancies were 5.1%, up from 4.5%. Total residential portfolio vacancies came to 4.1%.

The retail portfolio specialises in convenience-oriented shopping centres with a focus on essential retail to ensure defensive, stable returns. Properties include Springfield Value Centre, Musgrave Centre, and Coachmans Crossing.

The logistics portfolio invests in high-demand, strategic locations. It had zero vacancy as at December 31, with average downtime of only one month for new replacement tenants.

The exposure to motor showrooms was being reduced, and with the sale of 153 Old Main Road, Pinetown, there was only one motor showroom in the portfolio.

The residential portfolio is focused on inner-city precincts and suburban estates. Double-digit distribution growth from Zambia was forecast for 2025.

The loan-to-value ratio inched up to 42% from 41.9%. Lenders had granted a temporary relaxation of covenants to June 30, 2025; nevertheless, several de-leveraging initiatives were underway.

These include the implementation of the Unlisted Residential Fund, while the group debt restructuring process was at an advanced stage. In addition, there was an active disposal pipeline with R753.7m contracted for sale at year-end and another R432.5m expected to be contracted in 2025.

On the outlook for the retail portfolio, vacancies were expected to remain at a similar level to 2024. Escalations of bigger than 6% had been contracted for 81% of leases.

In the industrial portfolio, lease escalations were between 6% and 7%. On the outlook for the residential portfolio, Afhco and Indluplace’s performances were expected to remain strong, with high occupancy expected to continue.

Rental increases were expected to be at least in line with inflation. Like-for-like net property income was expected to be between 4.5% and 5%.

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SA Corporate Real Estate announces robust distribution increase, positive financial outlook