Octodec and Dis-Chem Strengthen Partnership with launch of Tshwane Community Clinic to Provide Accessible Healthcare

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.

Octodec and Cotlands Launch Kamane Educare Centre

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 Empowers Young Communities with complimentary access to Online Reading Platform Kibooks

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 provides hope to children through the Santa Shoebox initiative

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.

Octodec buoyed by strong Residential occupancy and income performance

Well-let shopping centres and imminent launch of HealthConnect in Tshwane ensures that the Group’s commercial portfolio is defensively positioned.

 

Highlights:

  • Rental income R1 995.1 mil (FY2022: R1 930.5 mil)
  • Profit for the year R610.5 mil (FY2022: R605.1 mil)
  • Distributable income after tax (REIT funds from operations) R455.8 mil (FY2022: R466.1 mil)
  • Cash generated from operating activities before dividend payment R447.2 mil (FY2022: 1 mil)
  • All-in weighted average cost of funding 9.2% (FY2022: 8.7%)
  • Distributable income per share (cents) 171.2 (FY2022: 175.1)
  • Dividend per share (cents) 135.0 (FY2022: 130.0)
  • Net asset value (NAV) per share R24.24 (FY2022: R23.28)
  • Loan-to-value (LTV) 37.7% (FY2022: 39.2%)

Wednesday, 1 November 2023 – JSE-listed REIT Octodec Investments Limited today announced a 3.3% increase in revenue to R1 995.1 million (2022: R1 930.5 million) as well as an increased dividend per share of 135 cents (2022: 130 cents) for the full year ended 31 August 2023. The Group did extremely well to limit property cost increases to 5.3% year-on-year in what was an exceptionally challenging operating environment.

Distributable income before tax decreased marginally by 1.3% from R465.9 million to R459.8 million primarily as a result of increased administration and corporate costs. Octodec’s residential portfolio, which accounts for 34% of the total portfolio by income and 27.3% of the portfolio by GLA, was the stand-out performer with income increasing by 10.2% year-on-year off the back of excellent occupancy levels and increased rentals. Excluding The Fields, which was negatively impacted by the reduction in the monthly National Student Financial Aid Scheme (NSFAS) allowance to students, residential vacancies at year end across the portfolio had dropped to a near pre-Covid levels of 5%.

Octodec’s portfolio of retail shopping centres continued to perform exceptionally well, with rental income increasing by 5.3% year on year and the Group remains confident that this sector will continue to perform strongly into the new financial year. Vacancies lowered slightly to 6.8%, however excluding Killarney Mall, which has higher vacancies, vacancies in this sector reached at an all-time low of 0.4%.

Commenting on the results, Jeffrey Wapnick, Octodec MD says: I am particularly proud of our residential and commercial leasing teams for their efforts in what has been a robust period of letting activity. These results, coupled with the sustained interest from large national retailers in our well maintained and well-located buildings, suggest that Tshwane and Johannesburg remain in demand and bustling with activity for residents, office workers and retail customers alike.”

Industrial and Office

Octodec’s industrial portfolio performed relatively well, experiencing rental growth of 3.8%, and 8.6% on a like-for-like basis, however vacancies increased from 6.8% to 8.7% largely due to several large pockets of space in the Pretoria West and Silverton becoming vacant at year end. The pipeline of interest for space in this area, however, remains strong, and the Group is confident that this sector will see improvement in occupancies going forward.

Core office vacancies remained stable relative to FY2022, with most large leases being renewed. Rental income however reduced by 5.3%, due to two significant negative government rental reversions.

However, the rest of the government leases were renewed at a 6% escalation plus operating costs, which was previously not recovered from government. This will bold well for FY2024, in the absence of any other unforeseen events.

Continued Portfolio Refurbishments and Developments

Octodec’s residential buildings are renowned for their high quality and FY2023 saw the refurbishment of the common and entertainment areas at Vuselela Place in Johannesburg, as well as the construction of a play and recreational area at Steyn’s Place in Tshwane. In addition, the Group completed its Shoprite development in the Tshwane CBD, with the remainder of phase two to be completed in FY2024 and commenced with its flagship conversion of HealthConnect (previously a vacant office building) adjacent to Louis Pasteur Medical Centre, into medical suites, which is anticipated to be completed in January 2024.

The Group remains committed to the disposal of non-core properties. Several agreements have been signed, but these are subject to suspensive conditions, and against this backdrop, Octodec sold and transferred properties for a total net consideration of R109.4 million during the year.

Jeffrey Wapnick adds: “Outside of delivering on our key operational and strategic priorities, we also undertook a wide range of important social initiatives that talk to our purpose of creating a thriving environment of diversity and inclusion for our communities. As an example, we are in the process of establishing an Early Childhood Development (ECD) Centre in partnership with a long-standing beneficiary of our CSI programme, Cotlands. This initiative will assist our tenants who work full-time to entrust their young children with qualified daycare staff in a warm, nurturing, and educational environment.”

 

In addition, Octodec, via its property manager City Property, was proudly involved in the launch of the Church Square Revival Project, a public-private community initiative led in conjunction with the City of Tshwane. The rejuvenation project aims to make Church Square, one of the most iconic and historically significant precincts in the country a cleaner, more accessible tourist destination and public space.

Balance Sheet Management and Execution

The Group’s focused efforts on collections was evidenced by a strong performance with collections averaging just under 99% for the period, while tenant arrears increased marginally to 4.2% of rental income (2022: 3.3%).

Octodec FD, Anabel Vieira, comments: “Octodec has refinanced all loans which matured during the current year as well as all loans maturing in FY2024, with the exception of one small facility, for periods ranging between three to five years. Over the past 24 months we have strengthened the balance sheet and improved our liquidity position with carefully timed debt reduction efforts early in the interest rate hiking cycle.

 

We have also undertaken a cautious but active approach to capital allocation, carefully selecting yield accretive capital projects and actively pursuing our disposal programme (of non-core, mothballed assets) in what is still a high inflation, low economic growth environment,” Vieira concludes.

 

Dividend

Octodec’s dividend policy is premised on retaining sufficient funds for maintenance, as well as for developments and acquisition opportunities. In lieu of this, the Board of Octodec declared a final dividend of 75.0 cents per share for the second half of the year, resulting in a total dividend for the year is 135.0 cents (FY2022: 130.0 cents) per share, a 3.8% increase on the prior year.

Prospects

Octodec experienced an increase in leasing activity during the year, and the Group’s residential, retail, and industrial assets remain attractive to prospective tenants. Although there has been a continued downward resetting of rentals across the industry, it is pleasing to see that several renewals were concluded at increased rentals, and we continue to experience demand from large retailers for space in both Johannesburg and Tshwane CBDs.

Management is cognisant of the impact of high inflation and interest rates and increasing energy costs, and therefore remain cautious in their approach to developments, including new builds and conversions, focusing on maintaining a healthy balance sheet and providing a steady distribution to shareholders.

Octodec MD Wapnick on the resilience of inner-city property investments

Johannesburg, 21 July 2023 – Octodec Investments, the largest single owner of properties in the Johannesburg and Tshwane CBDs, has carved a niche in a market others shy away from. The JSE-listed real estate investment trust (Reit) owns a diversified portfolio of 246 residential, retail, office, industrial and specialised assets valued at R11bn. Some of its CBD retail assets are mixed-use, with residential or offices at the top and retail at the bottom, such as Inner Court in Tshwane. These assets benefit from foot traffic passing through and people working and living in the CBD. Other mixed-use assets include The Fields and Sharon‘s Place in Tshwane, as well as shopping centres such as Killarney Mall and Woodmead Value Mart in Johannesburg.

Octodec’s knowledge of the inner city provides the fund with a competitive advantage to create sustainable and innovative spaces in a market that is little known about. Under the leadership of MD Jeffrey Wapnick, the fund continues to focus on upgrading and redeveloping its assets to unlock value for shareholders Octodec’s assets serve a thriving ecosystem of residents, small businesses, professionals, government employees and students, who form the diverse inner-city community that makes up a sizeable portion of its tenant base. Its residential portfolio of 65 properties and more than 9,200 units is experiencing unprecedented demand as inner-city accommodation remains affordable for many people starting out, those who have moved from the rural areas in search of jobs, and some students. Business Day caught up with Wapnick to talk about the resilience of the inner-city real estate market and Octodec.

What is unique about Octodec?

Denise Mhlanga stated, Octodec is one of the smaller listed Reits and operates in Gauteng with a large portion of our assets located in inner cities. Many people see this geographic and, specifically, CBD focus as a problem. We are a diversified fund with more than 14,000 tenants — if a tenant moves out, we can get a replacement. We have stayed in traditional areas because we believe in investing in the right localities, we have intimate knowledge of our market, and that is our competitive edge.

Your residential portfolio is outperforming. How are you getting this right?

We offer quality and affordable rental apartments in secure environments; hence demand continues to grow along with rental income while vacancies are reducing. About 64% of our portfolio is in Tshwane CBD and 36% in Johannesburg CBD. The portfolio offers 9.5% in yields. There is a chronic shortage of quality accommodation in the inner cities.

Our portfolio, with very low vacancies, continues to experience demand, enabling us to capture market share.

Our rentals range between R3500 and R6500 per month. To ensure more people can access quality accommodation at lower prices, we are piloting a product of much smaller units with certain shared facilities, bringing the rental price to below R3000. We were the first fund to convert office blocks into residential apartments (not all our residential blocks are conversions), and to date we have over 9,200 residential units. Demographics in the inner city have changed since SA became a democratic state and this has created an influx of people from other localities and rural areas in search of better opportunities. CBDs are the first step for those starting out, and this creates opportunities for the fund to provide quality accommodation with value-adds such as cashless laundromats, Wi-Fi and revamped common areas that are attractive to tenants.

What is the fuss about CBD retail and convenient mall offerings?

In the CBDs, most of our retail offering is located on the ground floor of residential and office buildings. We have street retail as well as convenient shopping centres outside CBDs.

In on the ground floor: MD Jeffrey Wapnick says that Octodec’s knowledge of inner cities gives it a competitive advantage.

We offer premium retail localities in the CBD with major national and listed retailers trading out of our assets, especially in Tshwane. In Tshwane, prime retail localities are characterised by heavy foot traffic, and this has been the case for 50 years. Areas like Stanza Bopape Street [the former Church Street] and Lilian Ngoyi Street are examples. We recently completed the redevelopment of a Shoprite store at Lilian Ngoyi. Our CBD retail portfolio attracts the likes of TFG, Truworths, and Shoprite as well as small retailers.

CBD retail trade is returning to pre-pandemic levels, and retailers see value in our locations and know how to capture this segment of the market. Our other retail assets, with the exception of Killarney Mall, are doing very well. We constantly relook our tenant mixes, and the only challenge we have at these malls is parking.

What about other assets?

Our industrial portfolio comprises small units in industrial parks where we have control of the environment. About 50% of our office portfolio is leased to government, with the balance of smaller spaces let to small and medium-sized enterprises. As a function of low economic growth, demand for bigger offices has stalled and tenants are under pressure. As a result, we have seen a vacancy creep in our portfolio.

Any acquisitions on the cards?

The market is tough — we are selling noncore assets but there are no buyers. Our focus is to reduce vacancies, redevelop assets in strategic localities to grow earnings, attract and retain tenants. We are converting a vacant office block to medical suites due to demand and this increases our small portfolio of healthcare facilities to two.

What is the outlook for Octodec?

SA’s macroeconomic and political issues are concerning, but we believe the fund is well positioned. Octodec is very cheap now — the yield is above average in the sector and our structure is simple. Our diversified portfolio creates sustainability within the business and given growing demand for rental accommodation in the inner city, we think the residential portfolio will continue to outperform.