Broadcast Type: Interview; Tags: Classic, Jeff, Genesis, Emira, Property, Fund, Emira, Prominent, Real, Estate, Investment, Trust, Listed, Chefs, Leadership, Steered, Tricky, Period, Achieving, Notable, Increase, Distributable
welcome back to classic business joining us now is jeff genesis of emira fund property emira is a prominent real estate investment trust listed on the j s e under chefs and leadership steered a course through tricky period a achieving a notable increase in distributable income per share by eleven point five percent and an impressive twenty point nine percent in dividend rise per share as as a commitment well as well to sustainability evident with like the installation initiatives of additional p and rainwater v farms harvesting projects and also diversification a further in the u s market jeff as well greater chetty also executed a significant deal during the period with the spear reit but at a headline level eleven percent increase and a half in distributable income really impressive would you say what were the key components contributed that to that sir michael important that recognise we that this is a twelve month period because of the change about financial year that we are comparing against a nine month year in the financial past so you're not comparing like for like so percent eleven and a half on a comparable basis isn't strong isn't that but i think what's important that when you here is unpack that and you realise that we had we had shown everybody we released when our last results nine month which is a result to the period two first thirty of march twenty three we shared everyone what was with our executive cape target of p i our dips distributable income per share of a hundred and eighteen point cents per four nine share and we've achieved a and nineteen point hundred o three cents and that's a that's a good so measure of what we actually in terms the target that set ourselves and what we we've achieved a reason why and there's that is lower on comparative basis a if you just do a simple gross up and that is one for three reasons is that we no longer accrue any income under for the nanny mezzanine loan which we are now fully provided for so that was the first one the second part is that we disposed strategically dispose of the higher yielding in nuclear investment that was generating to sixteen percent tien worth of income had meaningful but obviously risks in that that was a a lower s m and rural retail focused business and then the third part is rates interest are significantly higher at this time this this year rather the than what they were in previous year and you will you agree that have seen and interest rates a sort of two percent are now they were higher than what and if you've got a billion rand six debt burden against your rands worth fifteen billion of assets that that cost weighs on you so all in all that that's the unpacking in terms of what the comparative is and those net finance costs surged by forty six two percent due to those interest rates higher how much further to go to do you have mitigate the impact of rising interest rates on future finance costs so i think we certainly appear top to be at the of where the interest rate cycle but you still have got is that some old swap were set at attractive have to run rates are still of so there probably still is a little bit more upward pressure i think what's so important but in our and you've seen announcement and our previous announcement terms of in the liquidity that we're if we utilise creating and that liquidity to just for example reduce our debt as we would a temp on the basis before we deployed and it that will certainly mitigate that a lot of higher interest rate cost looking at the portfolio disposal through the period a few disposals significant and some in the pipes as well how do you ensure these transactions and enhance the overall portfolio quality and and are recycled to yield higher returns maybe you share some colour can just on the the broader strategy ja so from the nearest perspective looked we've always up to say what's of those the best use proceeds the asset fully valued how much and risk is valued into their price and so a good example we've done here is what done on the bolton an office which was block that we converted to residential it was nicely fully let nine at about ninety percent let generating a nine of percent yield our developed costs and we section analyse decided to that and sell off the units which individual we eighty five percent already sold and transferred out and so and selling those of if you're at a premium of twenty to thirty percent above the book value got a higher you've capital value then go and deploy which you can and again and that then do that certainly sums that we look up the way at it in the meaningful regard to held for sale and under contract pipeline which is just over two point billion rand one which includes the sale thirteen of the western cape access and the sale through to the spear of macro and market square and springfield retail centre those are all at on average a small premium to and book value frankly what it selling means is that you're an asset that is fully priced that's gonna be selling off assets at slightly yields of less than nine percent and simplistically if you just have to put that back debt into which is costing you ten bit percent it's and a gonna be value accretive more exciting but what cash can you do with that and we think much better that we can do than just putting it back debt into and so so these this recycling that we're programme on and have been for the last seven or eight years consistently a portion selling off of our assets at book premium to create a cash pile then deploy which you can and our ventures that into we've invested inclusive of the u s transcend inclusive of have worked well for us of exposure what sort do you have to pay pick and was interesting chatting to sean summers this earlier week announcing the the historical the ackerman decision by family to cede how control but also difficult it's been managing these various processes a consortium of banks as it breached debt covenants obviously chatting to landlords listing box so there's a lot of his players moment at the what sort of discussions are ongoing pick and pay with we've had negligible pick discussions with and pay and there's a reason for that is that they constitute three point percent of nine our total rental income and we look if at our six stores have with pick and that we pay none is material of that through to our overall business those they stores that we've got are all above operating or at the medium average in or maak the terms of trading density not a concern so there's there we the challenge don't think that is in regard to our stores and there's more of a my words structures capital part that they need to get right on their side in order for them a company to be as more profitable but we're seeing what taking place on the ground our centres in and our shopping centres and as pick and pay continued to perform the role of the food anchor and are unlikely close to their stores in our centres but having said that we've had negligible n contact with pick pay looking abroad your u s portfolio now represents around nineteen percent of your total asset base can you just elaborate on your thinking with regard to the u s given the strategic importance of these investments but particularly in light of how strong economy the u s has been and whether or not there there is a particular target that you might have in mind of what percentage total asset of your base that might comprise next five years over the so michael it took us four or five years to get the twelve be able to centres that we in own now the u s and that is spread through the u s and that economy the u s in is a strong economy can see it on the ground we of our occupancy in terms is still a very low vacancy of three point six percent and we can see it in terms growth rates of the rental coming through in that portfolio we've had that on average of five point percent positive eight diversion in the rentals that have come to to to market over the financial year last so that nineteen total percent of our assets is an important diversifier us for for we like it that in terms of getting u s income and we've certainly been looking over the last few years to expand that but our search hasn't has we haven't been meant that able to find anything ticks that all of our boxes and much as so as we would want to we are just to fassi we in terms of deploying of cash into the into additional investments because we feel that the price right has to be and we just haven't found anything works and that's that why with our cash power we have shared that we do further diversify intend to and it may not be further into the b u s it might be in a different offshore jurisdiction just lastly jeff what is your focus over months given the next twelve that you know down and when we sat we spoke earlier on this year the market consensus was that we'll see cuts by mid rate year that's subsequently being up just because pushed of how strong s economy the u has been one but also sticky inflation how has been so given that narrative is now the rate staying higher for longer what are the levers that you're gonna focussing on to be continue to navigate some waters tricky so i think in the interest side we rate are definitely at the top and it's just a matter of time rates start before interest to come down and falling interest rates certainly tailwind in terms of evaluation property our and and good for the consumers that's that's so the one thing and i think that that's going to happen you're that play out gonna see over the next twelve months but our particular focus at the moment to ensure that our is significant disposal pipeline two point two billion of is concluded and transferred this year and that those funds are in deployed to further diversify our what our balance sheet looks like so those are we've matters that started a long time ago and are all coming these to fruition and it's me we i think will be having an interesting conversation in six month's time about what when we talk we have deployed fantastic those funds into we're gonna thank you have to leave it there very much for your time geoff janet c e o of emira property fund reporting back on an interesting twelve months further and capital recycling into what sounds very exciting like some projects over on the next six year classic business