Archives for May 2023

World Hunger Day: Octodec to deliver 2.4 million meals to SA children

Johannesburg – The annual World Hunger Day was commemorated at the weekend on Sunday, and it put the spotlight on the food insecure. More than 820 million people worldwide live in chronic hunger. Children are most vulnerable to hunger as high child mortality and morbidity rates reveal the existence of important underlying factors that catalyse malnutrition. In these very difficult times in the world, South Africa is fortunate that progressive entities tend to step up to tackle the crisis.

 

On Monday, Octodec announced that it has joined a partnership, which will enable 2.4 million meals to be served to preschool children in South Africa in the next 12 months. Octodec joins the Dis-chem Foundation, FutureLife and Nivea to bolster its impact in alleviating child-hunger in South Africa.

 

This nationwide initiative was established by the Dis-chem Foundation and FutureLife in 2020, who have provided more than 2 million highly nutritious meals for the past three years. JSE-listed REIT, Octodec Investments Limited, said it was “pleased” to join the partnership. According to The World Food Programme, one in four children in South Africa is stunted due to malnutrition. Hunger can cause physical and cognitive developmental delays, leading to long-term consequences that can affect a child’s ability to learn and succeed in school.

 

Addressing hunger in pre-school children is critical for ensuring their health and well-being, as well as setting them up for success later in life. Head of Sustainability at City Property Lisa Carne said: “4.6 million South African children go to bed hungry every night; it’s a heart-breaking statistic that has motivated us for the last six-years to partner with Rise Against Hunger, where to date, we have supplied just under 650 000 meals.”

 

Carne added: “When the Dis-Chem Foundation approached us last year to partner with them on their feeding scheme, it was a cause that we were so passionate about, we could not resist.

 

“We made a donation to the Foundation which added another 222 000 meals to their campaign last year, and now we join them as an official partner to drive the campaign to reach even more children.”

 

Carne said the initiative was in line with Octodec’s social impact focus. She said in 2022, the company spent R2.4 million in assisting communities in need through Rise Against Hunger, Hope Worldwide SA, Forever Friends, Unchain our Children and Door for Hope initiatives. Furthermore, Carne said Octodec invests in communities and offers free rental space in their buildings to selected organisations, including Dignity Dreams, Cotlands, and Santa Shoebox.

 

“In addition, Octodec is deeply involved in the People Upliftment programme which aims to uplift students studying early childhood education,” said Carne. “This partnership is emblematic of the Group’s dedication to caring for the communities they operate in, which will see Octodec distributing 50 000 meals each month in four informal settlements surrounding Johannesburg and Tshwane.

 

Being part of this initiative allows the Octodec team to continue investing in our communities’ security, education, well-being, and sustainability. This is integral to our commitment to building dignity and creating a shared value.”

Octodec’s campaign wins the 2023 African SABRE Diamond Award

The company’s “Reinvigorating Corporate Narrative to Drive Investor Engagement” campaign in conjunction with its strategic investor relations and communications partner agency, Instinctif Partners, was recognised as having driven real and tangible business impact.

 

Octodec beat various global blue chips in the Superior Achievement in Measurement and Evaluation category as the campaign sought to consolidate and strengthen Octodec’s narrative to investors, resulting in a significant share price appreciation in 2022.

 

Managing Director, Jeffrey Wapnick, says, “This recognition demonstrates the impact of our work and emphasises the need to craft the right messaging, being forthcoming and transparent with disclosures to our shareholders. Our team continuously strive to provide long term stakeholder value, and we place great importance on how we communicate with our shareholders.”

 

The SABRE Awards is a global Public Relations platform that recognise superior achievement in branding, reputation & engagement, with separate competitions in North America, EMEA, the Asia-Pacific, Latin America and South Asia, and Africa. Various campaigns, through programs and initiatives are benchmarked for the best PR work from across each market.

Increased commercial and residential leasing activity bolsters Octodec’s half-year rental income

Group identifies several development opportunities and continues to benefit from improved LTV and strengthened balance sheet  

Highlights:

  • Rental income increase of 3.2% to R974.2 mil (HY2022: R944.4 mil)
  • Like-for-like rental growth of 4.1% (HY2022: 1.2%)
  • Cash generated from operating activities before dividend payment R239.8 mil (HY2022: R193.9 mil)
  • Distributable income after tax (REIT funds from operations R234.5 mil (HY2022: R211.8 mil)
  • All-in weighted average cost of funding 9.0% (FY2022: 8.7%)
  • Distributable income per share (cents) 88.1 (HY2022: 79.6)
  • Dividend per share (cents) 60.0 (HY2022: 50.0)
  • Net asset value (NAV) per share R24.01 (FY2022: R23.28)
  • Loan-to-value (LTV) 38.8% (FY2022: 39.7%)
Tuesday, 16 May 2023 – JSE-listed REIT Octodec Investments Limited today announced its interim results for the six months ended 28 February 2023, recording solid income growth driven largely by improved occupancy and higher rentals in its residential portfolio. Rental growth across most sectors remains stable against the backdrop of the difficult economic trading conditions. Several renewals of commercial leases are being concluded at increased rentals and demand for space in the Johannesburg and Tshwane CBDs remains strong.

Portfolio Performance

Octodec achieved revenue growth of 3.2% across its portfolio, driven primarily by a 10.3% increase in the residential portfolio, which has performed exceptionally well. Property costs, both on a gross and net basis, have improved marginally when compared to the prior period through hands-on management of properties. Residential vacancies continued to decrease in the Kempton Park, Johannesburg, and Tshwane CBDs. The successful introduction of shared and furnished accommodation options at The Fields, together with value-add services such as free Wi-Fi and the cashless Wash Bars at several of our buildings contributed to the improved occupancy and ensure that Octodec’s residential assets remain in high demand. Despite the seasonal fluctuation in occupancy in the residential sector, which is generally higher during the period, the vacancies decreased significantly to 6.9% in February 2023. This is inclusive of The Fields, which was impacted in part by the reduction in the National Student Financial Aid Scheme (NSFAS) allowance to students. Octodec has revised its offering to accommodate those affected by this reduction. Occupancy at other properties where students reside who are not funded by NSFAS, has not been impacted. Commenting on the half-year results, Jeffrey Wapnick, Octodec MD says: “This positive performance highlights that our unique, affordable, and quality products across all our sectors continue to be attractive and value-enhancing. Despite economic pressures, we retain our competitive edge which is supported by our in-depth knowledge of tenants’ needs and the introduction of attractive initiatives in both the Tshwane and Johannesburg CBDs. This encourages our continued focus to leverage opportunities that enhance our buildings and attract new tenants while improving our occupancy.” Octodec’s retail portfolio is unique, whereby its retail street shops are largely concentrated in the Tshwane and Johannesburg CBDs. We have seen improved footfall in the CBDs, particularly in the Tshwane CBD, although this has not necessarily translated into improved turnovers for our retail tenants. On a like-for-like basis, rental income increased by 3.2%. This growth was muted due to Standard Bank and Nedbank having vacated from two of our buildings during HFY2023. Octodec’s portfolio of retail shopping centres, which largely comprise convenience shopping centres, continues to perform strongly, with core vacancies at 6.4% and excluding Killarney Mall, is at 0.1%. Rental income from our shopping centres, including Killarney Mall, increased by 3.6% on a like-for-like basis. Jeffrey Wapnick adds: “We believe that despite the growing challenges around the reliable supply of electricity and underperforming municipalities, there is a renewed energy and restored confidence in the CBDs. While there has been less activity in the street shops due to constrained market conditions for consumers, leasing activity has increased and there is take up in spaces that were previously unattractive. We remain focused on our conversion and repurposing strategy as our well-located CBD assets continue to enjoy increased demand from large scale national retailers. This, we believe, positions us for growth as our tenants see value in our portfolios.” The office sector remains under pressure despite improved leasing activity. Although core vacancies improved slightly, rental reversions in the sector, together with some tenants vacating at the end of the prior year, contributed to a decrease in rental income in this sector of 5.4%. The industrial sector has proved to be resilient under the current operating conditions with rental income increasing by 7.8% and leases being concluded at an average increase of 7%. Vacancies have decreased and overall occupancy improved further to 94.3% since the previous reporting period. According to Octodec FD, Anabel Vieira, “Despite the challenging interest rate environment, we continue to manage our balance sheet and debt and together with a positive valuation of our property portfolio, we have achieved a further decrease in our LTV. We are actively monitoring opportunities to extend hedges and continue our efforts to improve our debt maturity profile.”

Development and Disposals

Octodec is currently refurbishing the common and entertainment areas at Vuselela Place, a mixed-use residential and retail building in the Johannesburg CBD. Furthermore, we are repurposing Ina Building, a vacant office building adjacent to Louis Pasteur Medical Centre into medical suites. We are excited by the demand thus far and completion is expected by January 2024. Octodec disposed of 5 properties identified in the current period and continues to focus on disposal opportunities at acceptable prices and progress has been made in this area.

Prospects

Jeffrey Wapnick concludes: “We remain focused on providing steady distributions to our shareholders. The Group has undertaken a prudent approach to capital management, and we remain cautious in our approach to developments without compromising on quality. While rising inflation, increasing energy costs and high interest rates have created difficult operating conditions for businesses, we are confident that Octodec’s strategy and diversified portfolio is well positioned for future growth given an improved economic environment.”

Dividend

With distributable income after tax increasing by 10.7%, the Board has declared an interim dividend of 60.0 cents per share for the six months ended 28 February 2023 (28 February 2022: 50.0 cents). This represents an increase of 20% on HFY2022.