The Group continues to actively manage its portfolio and value proposition through strategic conversion initiatives to grow income, reduce vacancies and protect and strengthen the capital and liquidity positions.

Highlights:

• Rental income R1 004.4 mil (HY2023: R974.2 mil)
• Distributable income after tax R219.5 mil (HY2023: R234.4 mil)
• Cash generated from operating activities before dividend payment R214.7 mil (HY2023: R239.8 mil)
• All-in weighted average cost of funding 9.2% (HY2023: 9.0%)
• Distributable income per share (cents) 82.47 (HY2023: 88.10)
• Dividend per share (cents) 60.0 (HY2023: 60.0)

Tuesday, 14 May 2024 – JSE-listed REIT Octodec Investments Limited today announces its interim results for the six months ended 29 February 2024, recording income growth of 3.1% largely driven by higher rentals in its residential portfolio. This was achieved against a challenging backdrop of weak economic growth, record unemployment and higher inflation and interest rates.

However, the Group’s strategic focus on implementing value-accretive conversion opportunities will bear fruit with the launch of HealthConnect and the commencement of the construction work of Yethu City in response to strong demand for quality healthcare and residential facilities in the Tshwane CBD.

Portfolio performance

Octodec achieved revenue growth of 3.1% primarily attributable to rental growth in its well performing residential portfolio. Despite the prevailing economic challenges, which have put significant pressure on South African consumers, this performance demonstrates the resilience of the portfolio as well as tenants’ appreciation of Octodec’s commitment to provide secure and quality accommodation. However, the Group’s distributable income before tax decreased by 7.0% from R236.8 million to R220.3 million, primarily due to higher property and administration expenses across the portfolio.

The Fields in Hatfield, catering predominantly to students, witnessed a resurgence in demand following the increase in NSFAS allowances in 2024, marking a notable decrease in vacancies from 23% to 7% by April 2024. However, increased vacancies in residential buildings near Lilian Ngoyi Street in Johannesburg tempered overall sector performance.

The Group’s portfolio of retail shopping centres continued to perform exceptionally well. On a like-for-like basis, rental income increased by 1.7%, however this growth was impacted by a small increase in vacancies at Killarney Mall. Excluding Killarney Mall, core vacancies remained below 1%, showcasing the strength and performance of the Group’s convenience shopping centres in Gauteng.

Commenting on the results, Jeffrey Wapnick, Octodec MD says “We are pleased to have grown our income and retained our dividend in these challenging market conditions. At the same time, we recognise the importance of not remaining idle, and are excited at the prospects of our recently announced developments, including the development of medical suites at HealthConnect adjacent to Louis Pasteur Hospital as well as the conversion of vacant office space into residential accommodation. These projects not only diversify Octodec’s portfolio but also contribute to community upliftment and sustainable growth. Additional strategic initiatives, such as enhanced student facilities at The Fields and investing in alternative energy solutions to mitigate load shedding, affirm our commitment to maintaining a best-in-class portfolio.”

Octodec’s office portfolio performance, while challenging, was stable. Although core vacancies increased slightly, rental income was impacted by some significant rental reversions in the government space, resulting in a decrease in rental income of 1.4% on a like-for-like basis.

According to Octodec FD, Anabel Vieira, “We are pleased to have still maintained a strong capital and liquidity position and LTV, as well as a solid and diversified funding base which will protect our portfolio and importantly, allow us to actively undertake more conversion and development opportunities to unlock our value while retaining the strength of our assets”.

Developments and disposals

Octodec has recently approved the conversion of a vacant office building in the Tshwane CBD into residential accommodation. The development will be known as Yethu City on Sisulu and will offer a slightly smaller and more affordable product relative to Octodec’s traditional residential units, with shared amenities such as living areas, kitchens and bathrooms.

The conversion, which is estimated to cost R44 million at a marginal yield of 13%, is expected to be completed by December 2024, with occupation in January 2025. In addition, Octodec intends to install a solar PV system to reduce the cost of electricity and provide backup power, which should further enhance the yield from this project.

HealthConnect, which is adjacent to the Louis Pasteur Hospital, offering medical suites to doctors and medical specialists was completed at the end of February 2024 at a cost of R64 million and a marginal yield of 13.1%, with occupation from March 2024.

Outlook: Purpose-driven, Social-impact Led

Jeffrey Wapnick concludes, “Looking ahead, Octodec remains committed to the principle of value creation. By leveraging our sector expertise and strategic vision, we will actively and cautiously identify and capitalise on opportunities that drive sustainable economic value and foster thriving communities.

At Octodec, we firmly believe that thriving communities are built on a foundation of accessibility, affordability, and quality of life. Through HealthConnect, as an example, we are not merely developing real estate; we are fostering a culture of care and compassion within our communities. By investing in projects that prioritise social impact and yet remain commercially viable, we are not only creating value for our shareholders but also contributing to the well-being of society as a whole.

Management’s focus for the second half of the year will be on maintaining the momentum achieved in growing income from the portfolio. The improved occupancy at our residential buildings should continue to impact positively on Octodec’s residential sector performance.

We continue to implement the value-added measures introduced at some of our properties, as well as ensuring backup power and water to our tenants during outages. The Group’s strategic focus remains on the redevelopment and repurposing of other properties to improve occupancy, grow rental income and ultimately, distributable income.”

By: Jeffrey Wapnick, MD, Octodec Investments Limited

In today’s fast-paced global business universe, where bottom lines often overshadow broader societal responsibilities, it’s essential to reassess how we measure success. In my role in particular, I’ve come to realise that commercial property owners and developers have a vital role to play in shaping the fabric of society. Beyond payout ratios, vacancy numbers and rent reversions, which are all critically important, our impact on communities should be a cornerstone metric of our success.

Recently, Octodec embarked on a transformative journey with the launch of HealthConnect — a project aimed not just at converting a partially vacant, existing building within the portfolio, but at addressing a pressing need within our community. Situated at the intersection of Sisulu and Francis Baard Street in the City of Tshwane, the renovation project for what was once called Ina Building, is a testament to our strengthened commitment to meeting the evolving healthcare needs of the surrounding areas.

Ina Building, once relegated to archiving purposes, presented a unique opportunity for repurposing into a medical centre. Its strategic location adjacent to the Louis Pasteur Medical Centre provided the perfect synergy to establish a hub of medical excellence. By introducing additional medical suites and fostering a seamless connection between the two structures, we aimed to create a space that not only provides medical services but also fosters a warm and comforting environment for patients.

While the physical transformation of the asset is undoubtedly noteworthy, the essence of HealthConnect lies beyond bricks and mortar. It’s about recognising our role as contributors to societal well-being, as facilitators of progress, and as stewards of community health.

In essence, it’s about leveraging our resources and expertise to create tangible, lasting impact.

At Octodec, we firmly believe that thriving communities are built on a foundation of accessibility, affordability, and quality of life. Through HealthConnect, we are not merely developing real estate; we are fostering a culture of care and compassion within our communities. By collaborating with the Louis Pasteur Hospital, we aim to integrate our facilities seamlessly, ensuring a continuum of care for patients and healthcare professionals alike.

The renovation of the Ina Building is more than just a functional upgrade; it’s a demonstration of our commitment to improving accessibility for all. From the creation of reception and waiting areas to the installation of bed and stretcher lifts, every aspect of the renovation is meticulously designed to enhance the overall experience for patients and visitors. Moreover, the addition of covered link bridges will provide sheltered pathways, further improving connectivity and convenience.

But beyond the physical enhancements, HealthConnect embodies a deeper sense of purpose — a pledge to fostering a culture of healing, comfort, and innovation within our communities. By providing accessible, affordable, and quality healthcare services, we are not only improving health outcomes but also enhancing the overall quality of life for individuals and families.

Commercial property owners are operating in a challenging post-Covid environment, particularly against a backdrop of interest rate and inflationary pressures. It’s easy in this context to lose sight of their broader societal responsibilities. However, my view is that success should be measured not just in terms of financial returns but also in terms of social impact. As stewards of the built environment, we have a unique opportunity — and a moral obligation — to use our resources and expertise for the greater good.

HealthConnect serves as an example of how commercial property can be leveraged as a force for positive change. By investing in projects that prioritise social impact and yet remain commercially viable, we are not only creating value for our shareholders but also contributing to the well-being of society as a whole.

Property owners have a unique opportunity to collaborate with government, industry bodies and public sector institutions and create a future where success is measured not just in rands and cents, or distributable income, or even rent escalations and reversions, but rather in the positive impact we leave on the world.

As a case study of purpose-driven commercial property conversions, the story of HealthConnect is not merely about property; it’s about the transformative power of social impact. Commercial property owners have a unique opportunity — and a moral imperative — to use our resources and expertise for the greater good. Let us seize this opportunity with both hands and pave the way for a brighter, more inclusive future for South Africa.

Tuesday, 13 February 2024 – JSE-listed REIT, Octodec Investments Limited, proudly announces the opening of the Dis-Chem Community Clinic today in Tshwane. This collaborative initiative underscores Octodec’s commitment to improving the quality of services for communities in and around Tshwane by providing accessible and affordable healthcare.

Establishing a Community Clinic in Tshwane is a vision borne out of Dis-Chem’s existing community outreach initiative, which brings accessible and affordable healthcare services to those in need. In this spirit, Dis-Chem approached Octodec to provide space for an accessible inner-city clinic in Tshwane. The clinic’s primary objective is to offer affordable healthcare services, emphasising the principle that value is attached to even a minimal cost. The clinic will provide appointment-based visits, reducing the need for patients to endure long queues or walk-in visits. Basic medications will be available, and the clinic will refer patients with more severe conditions.

Commenting on this initiative, Octodec Managing Director Jeffrey Wapnick said, “The opening of the Dis-Chem Community Clinic marks a pivotal moment for both Octodec and the surrounding communities. By collaborating with Dis-Chem, we are creating a meaningful and lasting impact in bridging the gaps in South Africa’s healthcare landscape, particularly in areas with limited access to quality medical services. This initiative is strongly aligned to Octodec’s purpose of making meaningful and sustainable contributions to the communities we serve.”

Octodec upgraded a dedicated space to meet the clinic’s requirements and provides the clinic with rent-free occupation for a period of five years. For Octodec, providing a free-of-charge space for initiatives focused on delivering social responsibility and community support is a norm as. Octodec provides free rental space in their buildings to several charitable organisations, including Dignity Dreams, Cotlands, and Santa Shoebox.

Lizeth Kruger, Community Clinic Executive, further emphasised the importance of the clinic, stating, “Opening our clinic will afford us the opportunity to increase medical access to people that are really in need, who don’t have the money to go to private clinics or doctors, yet need preventative care. This clinic represents hope and empowerment for people who need quality healthcare services.”

This collaboration also builds upon Octodec’s established partnership with Dis-Chem and Future Life who joined forces in 2023 to alleviate child-hunger through their Feed the Future programme, which aims to serve more than two million nutritious meals to school children. Added to this, and in line with Octodec’s response to the growing need for quality healthcare services, the company has completed the construction for the Health Connect Medical Centre, in the Tshwane CBD. Health Connect primarily focuses on accommodating doctors and healthcare professionals by providing medical suites in the adjacent but connected building of Louis Pasteur Hospital.

A R1.3 million partnership set to transform Early Childhood Development (ECD) for residents and community members in Tshwane

Tuesday, 6 February 2024 – JSE-listed REIT, Octodec Investments Limited, in collaboration with its long-standing social impact partner in Early Childhood Development (ECD), Cotlands, is proud to announce the launch of the Kamane Educare Centre, a transformative ECD facility in Tshwane. This initiative underscores Octodec’s long-standing commitment to enhancing the inner-city residential quality of life and actively supporting community welfare.

Cotlands, a highly respected non-profit organisation with an 87-year track record of successfully delivering on early learning initiatives that serve vulnerable children, says that 90% of a child’s brain development occurs within the first five years of life. Children who experience high-quality play-based early learning opportunities during the first five years of life have the advantage of acquiring holistic skills needed to succeed in school, employment, and later life.

Kamane Educare Centre officially opened in January 2024 and addresses the pressing need for accessible, high-quality services in Tshwane’s residential areas. It provides a Cotlands early learning playgroup programme, comprising of annual lesson plans linked to the National Curriculum Framework birth to 4, tailored to nurture young children’s cognitive, social, emotional, and physical development. To ensure quality play-based lessons, the ECD practitioner has also received accredited online training through Cotlands Ignite®.  Moreover, the Centre extends its services to school-going children, offering aftercare in a nurturing and educational environment.

Lisa Carne, Head of Sustainability at City Property said, “This partnership is vitally important to us as it holistically integrates the development of our surrounding community. We are investing in this Centre for the benefit of the children and families and contributing to our communities’ overall well-being and vitality. Our investment in the Kamane Educare Centre promotes accessibility, supports working families, and facilitates early childhood development while breaking the cycle of poverty and fostering community cohesion.”

With an investment of R1.3 million, Octodec’s property management arm, City Property, played a crucial role in overseeing the comprehensive renovation of Pete’s Place to establish the newly created Kamane Educare Centre. Every aspect of the facility is meticulously designed to ensure a safe, enjoyable, and enriching environment for children. Notable features include a dedicated sick bay, educational play areas, classrooms, sleeping areas with bathrooms tailored for minors, and a kitchen to make nutritious meals.

Beyond the physical enhancements, Octodec’s support for the Kamane Educare Centre aligns with its dedication to enterprise development and community empowerment. Annah Gumbi, a Cotlands-trained regional manager, is the proud owner of the Centre, which currently employs five professionals and Cotlands-accredited staff members and cares for 16 young students.

“We deeply appreciate the chance to establish a quality ECD Centre. It’s not just about delivering quality education but crafting a nurturing and practical environment. Parents are astonished at how we’ve turned this dream into reality. Unlike many ECDs in makeshift spaces around the CBD, this partnership has enabled us to redefine what a true home, safety, and convenience mean for our children,” said Gumbi.

In an exciting development, the Centre will soon introduce a toy library, facilitating educational toy exchanges among residents and neighbouring ECD centres. Octodec’s staff has eagerly embraced this initiative, with many volunteering to contribute pre-loved educational toys.

The long-standing partnership between Octodec and Cotlands extends beyond the Kamane Educare Centre. Octodec has historically provided free rent to Cotlands’ Head Office, while City Property actively supports a community skills development programme, focusing on Cotlands-accredited teacher training. Furthermore, Octodec champions ECD learnerships through its POP-UP program, contributing to youth upskilling and empowerment.

Octodec Investments Limited takes immense pride in its commitment to transforming inner cities in Gauteng and uplifting surrounding communities through various empowerment initiatives for tenants. Since 2022, Octodec has been providing complimentary access to Kibooks, an online reading platform, as part of its efforts to empower young readers residing in its buildings.

This online reading platform, accessible through Octodec’s free Wi-Fi for tenants, serves as a digital pocket library, offering over 6,000 titles in South Africa’s 11 official languages. The primary goal is to foster a culture of literacy and learning among children in Octodec’s communities.

Octodec views Kibooks as an educational tool that can supplement traditional learning methods, creating a stimulating environment for children that reside at its properties. The platform’s interactive features and diverse content aim to bridge educational gaps and provide additional resources to enhance literacy skills. The diverse language options of Kibooks reflect the cultural diversity of inner-city spaces like the Pretoria and Johannesburg CBDs, ensuring children see themselves represented in the stories they read.

“In a world driven by continuous progress, literacy stands as the cornerstone of personal and societal development. Initiatives like Kibooks are crucial because they address a fundamental need — the need for accessible, diverse, and engaging educational resources. By fostering a culture of reading, Octodec contributes not only to individual development but also to the collective growth of the community,” said Lisa Carne, Head of Sustainability.

Recognising the importance of parental engagement in children’s education, Kibooks, with its user-friendly interface, serves as a tool for parents to actively participate in their child’s learning journey. Octodec has initiated a communication campaign to ensure that every family in its buildings is aware of the initiative, encouraging them to make use of Kibooks for the benefit of their children’s education and enjoyment.

Matshwane Molomo, a resident, shared, “My child enjoys Kibooks. Reading is becoming as easy as 1-2-3. She can independently navigate the app to explore various topics, stories, and subjects available on the Kibooks platform, and I value this added service. As a parent, I appreciate the importance of reading – if your child can read well, it’s easy to learn. Reading is an indispensable skill and enriches children’s lives.”

In a further demonstration of its commitment to community development, Octodec has extended access to Kibooks to its employees, promoting a shared passion for reading and continuous learning. This initiative contributes to creating a workplace culture that values knowledge and growth, attracting businesses to the area, fostering economic growth and stability.

Octodec remains dedicated to its principles of sustainable and responsible investing in the inner city, aiming to create thriving and empowered communities.

Octodec, with the help of City Property, has put smiles on the faces of 652 underprivileged children through the Santa Shoebox Project.

 

20 November 2023 – JSE-listed REIT, Octodec Investments Limited, hosted a Santa Shoebox packing day on 27 October 2023, an initiative that has consistently demonstrated the company’s commitment to giving back to the community while building thriving inner cities. Through the collaborative efforts of its staff, 652 Santa Shoeboxes were packed at 012central in the Pretoria CBD to distribute to underprivileged children throughout the province.

 

In South Africa, where more than half of all children live below the poverty line, the Santa Shoebox Project plays a crucial role in collecting and distributing personalised gifts consisting of essential items and treats to these disadvantaged children across South Africa and Namibia. The project, which originated in Cape Town in 2006 with a total of 180 shoeboxes being packed, has now entered its 18th year, having positively impacted the lives of more than 1,152,580 children. Each shoebox is thoughtfully curated to include vital items such as a toothbrush, toothpaste, soap, facecloth, school supplies, a toy, sweets, and an item of clothing.

 

Lisa Carne, Head of Sustainability at City Property, said, “We take immense pride in our involvement in this initiative, which brings joy to disadvantaged children throughout this country. Our employees’ enthusiastic participation demonstrates our unwavering commitment as City Property and Octodec to positively impact the communities we serve. We operate with purpose and our collaboration with the Santa Shoebox Project is one such demonstration that we invest in the well-being and sustainability of our communities.”

 

Octodec has been an active supporter of this initiative since 2017 by providing Santa Shoebox with rent-free space. For Octodec, providing a free-of-charge space or space at a reduced cost to a non-governmental organisation (NGO) such as Santa Shoebox, signifies its dedication to social responsibility and community support when funding is often limited.

 

“We believe that by alleviating this important NGO’s operating expenses especially at this time of their meaningful events, we are playing a role in helping the organisation direct more of its resources towards its mission and initiatives, ultimately contributing to the betterment of society and the welfare of those children in need. Given the magnitude of the impact of this project on vulnerable children, we are pleased to be in partnership with Santa Shoebox and look forward to continuing to support the initiative,” concludes Carne.

 

This initiative is also part of Octodec’s various social impact focusses in which the company spent R3.2 million in 2023 to assist communities in need. Together with its partnership alongside Santa Shoebox, Octodec also offers free rental space in their buildings to several charitable organisations, including Dignity Dreams and Cotlands. As part of its long-standing relationship with Cotlands, Octodec is in the process of establishing an Early Childhood Development (ECD) Centre in 2024. This initiative will assist Octodec’s tenants who work full-time to entrust their young children with qualified daycare staff in a warm, nurturing, and educational environment.