Key highlights

• Revenue increased by 2.1% to R1.08 billion
• Like-for-like rental growth of 3.4%
• Distributable income per share (DIPS) up 11.1% to 92.6 cents
• Dividend per share increased by 4.0% to 64.5 cents
• Net property income (NPI) up 1.9%
• Collections remained strong at 98.5%
• Core vacancies improved to 13.1% (HY2025: 13.7%)
• Loan-to-value (LTV) reduced to 37.3%
• 10 non-core properties disposed of for R89 million at a 7.6% exit yield

Johannesburg, 12 May 2026 – Octodec Investments Limited (“Octodec” or “the Group”) today announced its interim results for the six months ended 28 February 2026 (“HY2026”), reflecting continued progress in simplifying the portfolio, recycling capital, and improving earnings quality.

 

Clear progress against strategic priorities

The Group delivered double-digit growth in distributable income, supported by improved funding costs, strategic asset sales, stable property income, and continued leasing momentum across key segments.

Chief Executive Officer, Jeffrey Wapnick, said:

“We are seeing the benefits of a focused strategy coming through in our results. The business is becoming more streamlined, more efficient, and better positioned for growth as we actively reshape the portfolio and redeploy capital.”

Strategy in action and portfolio performance

Octodec continued to make meaningful progress in reshaping its portfolio through an active disposal and reinvestment programme. During the period, the Group disposed of 10 non-core properties for R88.7 million, while also announcing the disposal of Killarney Mall for R397.5 million, subject to conditions. These transactions form part of a broader initiative to reduce exposure to smaller, non-core and underperforming assets, while redirecting capital into larger, higher-quality opportunities with stronger income potential and scalability.

Deputy CEO and Chief Financial Officer, Riaan Erasmus, commented:

“We are making steady progress in reducing the long tail of smaller assets and concentrating the portfolio around properties that offer scale, stronger income profiles, and long-term relevance.”

This repositioning is supported by a solid balance sheet. The Group’s loan-to-value (LTV) ratio improved to 37.3%, comfortably within the targeted range, while R1.1 billion in available facilities provides flexibility to support ongoing capital allocation. Refinancing during the period was achieved at more favourable margins and tenor, contributing to improved funding efficiency.

 

Solid operational performance

Operationally, the portfolio continues to perform steadily. Rental collections remained strong at 98.5%, reflecting consistent tenant engagement and cash flow stability, while vacancies trended down, particularly within the residential portfolio. Performance across the core asset base remained stable despite a mixed operating environment.

Within the portfolio, residential remains a key contributor, supported by sustained demand for well-located, affordable accommodation. Rental income increased by 5.5% during the period, vacancies reduced to 7.7%, and like-for-like rental growth of 5.7% reflects improved occupancy levels, steady rental escalations, and targeted asset enhancements.

“Demand for well-located, cost-effective accommodation remains a key underpin of our performance, particularly in our core Tshwane portfolio,” Wapnick adds.

The retail portfolio showed encouraging signs of stabilisation, with street retail performance beginning to recover in key nodes, including Johannesburg, supported by improving footfall and trading conditions. Shopping centres delivered like-for-like rental growth of 7.7% with the portfolio (excluding Killarney Mall) effectively fully let.

The office portfolio remained broadly stable, with management continuing to assess select assets for potential disposal or conversion. This forms part of a broader approach to unlocking value through repositioning and repurposing. Meanwhile, the industrial portfolio delivered steady growth, with rental income increasing by 6.8%, supported by continued demand for smaller warehouse and mini-industrial space.

 

Unlocking Octodec’s Growth Pipeline: Yethu City

Yethu City continues to demonstrate strong demand and operational success, reinforcing its role as a key strategic platform for future growth. The development was fully let within 3.5 months of launch and has maintained near- to full occupancy, while also being recognised as the Best New Affordable Housing Development at the 2025 API Summit Awards. Its success is underpinned by an integrated offering combining co-living design, smart technology, and community-focused planning.

Building on this success, Octodec is actively progressing opportunities to expand the Yethu City concept. The Group has identified a pipeline of potential conversion opportunities within its existing portfolio and is engaging with funding and development partners to support future rollout. Ongoing feasibility work continues to support the scalability of the model.

“As we streamline the portfolio, we are creating capacity to reinvest into scalable formats that align with structural demand in the urban housing market,” Erasmus adds.

Capital allocation remains closely aligned to these priorities. During the period, R71 million was deployed into capital projects, focused on yield-enhancing upgrades, energy and water resilience initiatives, and improvements to tenant experience. Recent solar installations returned approximately R5.2 million in cost savings for the period. Proceeds from disposals continue to support reinvestment while maintaining balance sheet flexibility.

 

Outlook

Looking ahead, Octodec’s medium-term focus remains on further simplifying the portfolio, accelerating disposals, and reallocating capital into higher-quality, scalable assets, while increasing exposure to defensive, high-demand sectors and improving earnings quality over time.

The Group remains constructive on the outlook, supported by improving macroeconomic conditions, continued demand for affordable and well-located space, and a clear pipeline of strategic initiatives. Octodec has upgraded its guidance for the 2026 financial year, expecting distributable income and distributions to grow by between 3% and 5%.

“Execution is increasingly visible in the shape of the portfolio and the quality of earnings. We are encouraged by the momentum in the business and the opportunities ahead. With a clearer, more focused portfolio, we believe Octodec is well positioned to build on this trajectory,” concludes Wapnick.

• • Revenue grew 4.6% to R2.2 billion, with all sectors contributing to the growth

• • Core vacancies reduced to 12.3% with improved occupancies across all sectors

• • Solid progress made against asset recycling programme, 17 properties sold

• • Funding facilities refinanced at improved margins and LTV reduced to 38.2%

• • Total dividend 7.6% higher at a payout ratio of 78.4%

• • Yield enhancing solar projects contributed to cost savings with further investments made

• • Yethu City pilot project met with success on launch and a blueprint for future conversions

• • Strategy refreshed including focused portfolio rationalisation to enhance future returns

 

Tuesday, 25 November 2025 – JSE-listed REIT Octodec Investments Limited today announced its annual results to 31 August 2025, reporting growth in distributable income per share of 8.2% on the back of a resilient portfolio performance. The board declared a final dividend of 72.5 cents per share, taking the total dividend for the year to 134.5 cents, a 7.6% increase on the prior year.

Commenting on the results, Jeffrey Wapnick, Octodec CEO says, “I’m proud of the progress achieved this year. Focused strategic actions and disciplined execution saw us grow rental across all sectors, meaningfully improve occupancies, secure lower funding rates, reduce debt and enhance the portfolio to drive sustainable value creation. Despite facing familiar challenges, renewed market confidence, lower inflation and declining interest rates created a more favourable operating environment which supported the overall strong performance.”

 

The portfolio, valued at R11.2 billion delivered revenue growth of 4.6% at R2.2 billion, with all sectors contributing to the increase, although residential and shopping centres were the strongest performers. Total core vacancies decreased from 14.9% to 12.3%, while collections remained strong at 99% of total billings and reversions moved in the right direction. Costs were tightly managed with the focus being on containing them below or in line with inflation. Net property expenses recorded an increase of 4.1%, driven mainly by above inflation increases in utilities, cleaning, and security costs, as well as bad debt provisions. Administrative and corporate expenses increased by 4.9% while net finance costs were just 0.6% higher, owing to maturing interest rate swaps, offset by improved margins on refinanced borrowings.

 

The Lilian Ngoyi Street in the Johannesburg CBD remained under repair for the full financial year. This negatively affected both the retail street shops and residential sector performances due to tenants of the 14 directly impacted properties having limited accessibility and being unable to trade effectively. The street was however reopened on 12 September 2025, with management optimistic about the prospects of improved trading conditions as footfall and buying patterns gradually recover.

 

Unpacking the sector performance

The residential portfolio achieved a decrease in vacancies from 9.2% to 8.0% and a 5.4% increase in rental income. Improved occupancy at The Fields which benefitted from an increase in the NSFAS accommodation allowance and pre-approval of NSFAS funded students had a tangible impact.

 

Octodec’s well located, secure, and well-maintained residential properties remain in high demand with the shortage of quality accommodation at affordable prices creating opportunities for Octodec to convert underperforming offices into residential or mixed-use assets.

 

The successful launch of Octodec’s communal living pilot project, Yethu City – on Sisulu, is an exciting case in point. The new product, offering a lower entry market rental, sustainability and tech-enabled features was well received, reaching full residential occupancy within ten weeks. The award-winning pilot has demonstrated strong potential for replication and scale as Octodec continues to innovate to address evolving market needs.

 

The portfolio of largely convenience shopping centres recorded significantly reduced core vacancies of 6.9% (FY2024: 10.0%) or 0.5% when excluding Killarney Mall which was held for sale during the period. Rental income, including Octodec’s joint venture, showed pleasing growth of 6.2%, reflecting active tenant mix management and robust demand for this retail category.

 

Octodec’s 50% joint venture Blaauw Village, a neighbourhood shopping centre in Pretoria North, performed exceptionally well, delivering an 81.8% increase in income, mainly due to rental income growth and cost efficiencies.

 

In Johannesburg, Octodec’s distinct portfolio of street retail remained challenged by tenant sustainability linked to pressure on consumers’ real disposable income and compounded by the impact of the unrepaired damage on Lilian Ngoyi Street. Rental income accordingly increased by 1.2% or 2.0% on a like-for-like basis while core vacancies declined from 14.0% to 12.0%.

 

Although the office sector remained under pressure with vacancies persisting, smaller, affordable spaces continued to attract niche operators and small businesses with Octodec’s strategy to repurpose underutilised office buildings in selected locations proving successful. Core vacancies decreased from 24.3% to 20.8%, partially due to the disposal of a property in Johannesburg while rental income increased by 4.9% or 8.0% on a like-for-like basis, helped by lease adjustments relating to certain government renewals.

 

Octodec’s industrial portfolio showed resilience, supported by steady demand for smaller, flexible spaces suited to SMEs. Core vacancies declined from 10.0% to 5.6%, mainly driven by the letting of several larger spaces. Rental income increased by 2.4% or 6.1% on a like-for-like basis, constrained by broader affordability pressures.

 

Executing the capital recycling and portfolio enhancement strategy

During the reporting period, Octodec invested R102.5 million in developments, improvements and larger tenant installations which will support increased earnings.

 

Most notable of these, is the completion of Yethu City – On Sisulu at a cost of R45.5 million, with R27.3 million incurred during the reporting period. The estimated marginal yield is between 11.0% and 12.0% and is expected to be enhanced by electricity cost savings from the solar power installation. Octodec invested R10.6 million in a sizeable yield accretive solar project at its largest asset, The Fields, with the project completed in July 2025. A further R10 million was spent on five solar projects and R10.6 million on energy efficiency management initiatives.

 

During the year, 17 non-core smaller properties were sold for total net proceeds of R152.3 million, at a weighted average exit yield of 9.5%. One small property, which is complementary to the Rentmeester Office Park, was acquired for R8.0 million, with a first-year yield of 9.3%.

 

Prudent management of borrowings and cash flow

R1.6 billion of bank funding was successfully refinanced and R155 million in unsecured corporate bonds were issued, all at improved margins, with tenors ranging between three to five years. Octodec’s hedged position was carefully managed throughout the reporting period to benefit from lower interest rates, ending the year at 71.9% of borrowings.

 

Proceeds from the disposal of properties were applied towards debt, reducing outstanding borrowings from R4.4 billion to R4.3 billion. The reduction in borrowings, together with a slight increase in the portfolio value led to a decrease in the group’s LTV from 39.2% to 38.2%. The all-in weighted average cost of borrowings declined from 9.5% to 9.1% and Octodec ended the period with unutilised available banking facilities of R800 million. A further R200 million in unsecured corporate bonds was raised post-year end.

 

Riaan Erasmus, Deputy CEO and Financial Director highlights, ”Strategic asset recycling and disciplined treasury management were key to delivering these results and to strengthening Octodec. Guided by our refreshed strategy we look forward to building on this momentum as we shape the portfolio to deliver greater value.” 

 

Strategic focus and prospects for the year ahead

In August, Octodec’s board approved a refreshed strategy to guide the Group’s priorities over the coming years. A key pillar of the strategy is a more resolute but responsible rationalisation of the property portfolio and consideration of the nodes in which Octodec invests, to focus asset management on a portfolio that can yield increased returns. This will be complemented by a newly approved sustainability strategy which includes initiatives to access sustainable financing.

 

In line with the strategy, five additional properties were disposed of post year-end at a gross consideration of R48.4 million (excl. VAT), while management remains intent on executing the sale of Killarney Mall.

 

The relatively stable political environment, lower inflation and potentially lower interest rates following the reduction in the long-term CPI target, as well as South Africa’s removal from the FATF grey list, should provide further impetus for growth at both a macro and Octodec level.

 

Despite these tailwinds, economic pressures remain and FY2026 presents Octodec with the added challenge of addressing large vacancies which recently materialised at two buildings (together 18 959m²). The Yethu City concept is actively being explored as a potential solution for the one building (12 086m²) while management is marketing the other building for relet and considering its disposal. As a consequence of these vacancies, Octodec expects to achieve growth in distributable income and distribution per share of between 0.0% to 4.0% in FY2026.

 

”While pressures remain in the year ahead, we are encouraged by Octodec’s trajectory and are increasingly confident in the outlook. I believe the future holds promise, and that Octodec is well positioned to capture new growth opportunities and enhance future returns,” concluded Wapnick.

• Revenue grew 5.2% to R1.1 billion
• Core vacancies reduced to 13.7% with all sectors contributing to the improvement
• Cash generated from operations up 25% to R270 million
• Distribution per share 3.3% higher at 62.00 cents
• Executed the sale of ten properties aligned with the portfolio recycling strategy
• Yield-enhancing solar projects rolled out at two key assets
• Pilot project Yethu City launched to high market demand with residential units 97% let

Tuesday, 13 May 2025 – JSE-listed REIT Octodec Investments Limited, today announced its interim results for the six months ended 28 February 2025, reporting a resilient performance across its Gauteng-based portfolio, despite a challenging market context.

Building on early signs of economic recovery, Octodec management focused on soundly managing the portfolio and the Group’s value proposition, reducing vacancies and disposing of ten non-core assets.

A highlight for the period was the completion of and successful launch of Yethu City – on Sisulu in mid-February 2025. This redevelopment pilot project exemplifies Octodec’s ability to address market needs by introducing quality, accessible co-living accommodation to the Pretoria CBD. The letting rate exceeded expectations, with the residential occupancy reaching 40.7% by end February 2025 and currently nearing 100%.

Commenting on the results, Jeffrey Wapnick, Octodec MD says “We are pleased to have grown our rental income and dividend despite a challenging operating environment, reflecting the stability of our portfolio and the effectiveness of our strategic initiatives. We remain committed to managing our portfolio in alignment with market demand, while supporting long-term sustainability and driving value creation. We are thrilled about the successful launch of Yethu City as part of our efforts to provide well-priced, quality accommodation and unlock new opportunities for growth and enhancement of returns.”

Portfolio performance 

The overall portfolio, valued at R11.3 billion, delivered revenue growth of 5.2% at R1.1 billion, and a reduction in core vacancies to 13.7%, largely driven by improved performances from the Shopping Centre and Office portfolios.

Octodec’s portfolio of retail shopping centres, anchored by a strong base of convenience centres, recorded core vacancies of 0.8%, when excluding Killarney Mall which is held for sale. The portfolio achieved solid rental income growth of 6.2% to R91 million, reflecting management’s yield-enhancing actions, and robust demand for this retail category.

Rental income from retail street shops rose by 1.4% on a like-for-like basis while the strategic disposal of properties with high vacancies supported an improvement in occupancy from 86.0% to 87.4%. The Group acknowledges the impact of macroeconomic challenges and infrastructure constraints on this retail segment – most notably the Lilian Ngoyi Street that is currently under repair in the Johannesburg CBD, which contributed to elevated core vacancies of 21.9% at these affected properties.

Octodec’s office portfolio performance showed some green shoots, recording encouraging like-for-like rental income growth of 6.4% to R151 million, when excluding a net lease adjustment applied in the comparative period. Core vacancies improved slightly from 24.3% to 23.4%. Management continues to proactively manage underperforming assets through disposals and strategic conversions.

Octodec’s residential portfolio recorded above-inflation rental income growth of 5.1% on a like-for-like basis. Vacancies ended slightly above the comparative period at 8.4%, however were below the FY24 figure of 9.2%.

The Hatfield properties benefitted from pre-approval of NSFAS funded students and the enhanced amenities for students, recording a notable decline in vacancies of 3.1 percentage points. The introduction of the Yethu City co-living offering, aims to address affordability constraints and capture the vast demand for quality accommodation in this market.

The industrial portfolio consisting of smaller warehouses and light industry performed well, delivering rental income growth of 5.1% on a like-for-like basis and reduced vacancies of 8.7%.

Disposals and Capital Investment

In line with its strategy to exit non-core properties and redeploy the capital more advantageously, Octodec sold ten non-core properties at a weighted average exit yield of 8.4%, receiving R49 million in net proceeds. Several capital investment projects were undertaken during the period, most notably the installation of solar panels at The Fields and The Park Shopping Centre, which is expected to yield significant returns and enhance both the value and appeal of the properties. Smaller value-enhancing projects included the upgrade of Waverley Plaza, improvements at government-tenanted Rentmeester Park and at the historic landmark building, Bank Towers, where Octodec welcomed a new look Jet store.

Prudent financial management

Cash generated from operations (before dividends) was 25% higher at R270 million. The group’s total borrowings ended the period at R4.4 billion and the LTV was reduced to 38.5%. Effective 30 November 2024, R970 million in funding was refinanced at improved margins with tenors of three to four years. The weighted average cost of funding ended the period slightly higher at 9.4% as a result of expired interest rate swaps. Management is proactively negotiating the refinancing of a further R650 million of debt maturing end August 2025. At the end of the reporting period, borrowings were 51% hedged and within the Group’s hedging target of between 50% to 60% in the short to medium term. The Group ended the period with R692 million in cash and unutilised banking facilities which is sufficient for its capital commitments.

Outlook and prospects 

The formation of the Government of National Unity (GNU) has lifted market sentiment and together with interest rate cuts has improved the operating backdrop. These developments have already supported disposal activity and offered relief to small businesses, while presenting opportunities to lower Octodec’s funding costs, improving the potential for value-accretive reinvestment. While the lingering effects of the Lilian Ngoyi Street gas explosion and persistent unemployment continue to weigh on parts of the portfolio, management remains focused on tenant support, claim recovery, and adaptive asset management. However, heightened geopolitical risks, a material government lease termination, and uncertainty tied to the sustainability of the GNU, have prompted a more cautious outlook.

Riaan Erasmus Deputy CEO and FD adds, “We remain cautious in our interest rate outlook and focused on maintaining a disciplined balance sheet. As previously communicated, the Board has mandated a more assertive disposal strategy for non-core assets, where sales proceeds will be recycled into yield-enhancing investments or used to reduce borrowings, ultimately supporting income growth and strengthening the Group’s financial position. The early success of Yethu City underscores our strategy to reimagine underutilised assets to drive future returns.” Based on the economic outlook and caution surrounding geopolitical tensions, management has revised its guidance for growth in distributable income per share, to between 2% and 4% , while maintaining a minimum dividend pay‑out ratio of 75% of distributable income.

 

Despite a challenging economic environment marked by high inflation, interest rates, failing infrastructure, and poor service delivery, Octodec achieved a 4.1% increase in group revenue to R2.1 billion.

• Increase in rental income to R2.1 billion
• Rental income growth largely due to the residential and shopping centre portfolio contributions
• Value-enhancing repositioning of strategic assets and tenant mix to deliver future growth
• Cash generation of R433 million and prudent balance sheet management
• Successful refinancing of debt maturities and opportunities to benefit from the declining interest rate cycle
• Riaan Erasmus announced successor for top executive positions and to drive portfolio optimisation
• Total dividend per share of 125 cents for the year

JSE-listed REIT Octodec Investments Limited today announced its annual results for the financial year ended 31 August 2024, delivering a resilient 4.1% increase in group revenue to R2.1 billion despite numerous headwinds faced during the period.

Notably, the residential and shopping centre portfolios saw the highest rental income growth at 3.8% and 3.0%, respectively, largely driven by lease escalations and offset by increased vacancies. Average collections remained strong at over 100% of billings, however rental income was affected by rental concessions related to the impact of unrepaired damage on Lilian Ngoyi Street in Johannesburg. Total core vacancies excluding properties held for redevelopment increased slightly from 14.2% to 14.9%. High inflationary cost pressures and an increase in net finance charges saw distributable income before tax end the period lower at R422 million. Octodec declared a final dividend of 65 cents per share bringing the total dividend for the year to 125 cents per share.

Resilient portfolio performance

Octodec’s residential properties offering well-located, secure, quality accommodation continue to attract tenants. Low economic growth, increased unemployment, and prolonged high interest rates have however placed financial pressure on tenants, leading to a higher rate of vacancies compared to new lettings. Vacancies generally increased as a result and were compounded by the knock-on effect of the unrepaired damage on Lilian Ngoyi Street, limiting rental income growth to 3.8%.

The Fields property in Hatfield was a key success, recording an over 50% reduction in vacancies, demonstrating the competitiveness of its enhanced student offering and benefiting from certainty around the NSFAS accommodation allowance. Octodec invested in The Fields to respond to market needs, adding event space for student wellness workshops, entertainment, and other social activities, a quiet green rooftop space for students to relax and a student centre to study individually or in work groups.

The retail shopping centres portfolio, made up of mainly convenience centres, performed well despite a temporary but sharp rise in vacancies owing to decisive management action to vacate underperforming tenants and improve the tenant mix at two key centres. The vacant spaces were re-let, introducing new tenants such as Jo Borkett and Sweet Hyper Mega, who replaced West Pack Lifestyle at Woodmead Value Mart with the portfolio (excluding Killarney Mall) fully occupied post period end. Killarney Mall has been strategically identified as an asset to recycle and management are actively working towards unlocking this value. Rental income increased by 3.0% year-on-year to R174 million, and the Group remains confident in the sector’s continued strong performance.

Octodec’s retail portfolio continues to attract high foot traffic and interest from large nationals. During the period, the challenging economic climate impacted tenant sustainability while certain tenants exposed to Lilian Ngoyi Street were unable to trade effectively. Octodec is actively supporting affected tenants until road repairs are completed and is encouraged by the strong interest from large national retailers to take up vacant space, albeit on beneficial occupation or low initial rentals. Overall, rental income from retail shops grew by 1.4% year-on-year and 2.2% on a like-for-like basis, with the low growth attributed to the rise in vacancies and retention strategies, including lease renewals without rental escalations.

Commenting on the performance, Jeffrey Wapnick, Octodec Chief Executive Officer said “I am pleased with the level of demand experienced across our portfolio, and with the overall performance from our residential and shopping centre portfolios which delivered the strongest growth despite the lacklustre economy. Our strategy to upgrade, convert, and repurpose strategically located buildings continues to unlock value, better align our portfolio with market demands, and position us for sustained success. Equally so, our decisive action to optimise our retail tenant mix within our shopping centre portfolio will support future returns.”

The office sector as evidenced across South Africa remains under pressure, with tenants continuously opting to reduce their leasing requirements. Vacancies therefore remain difficult to close and recorded a slight increase during the period with rental income unchanged from the prior year. This portfolio offers opportunity to extract value from vacant buildings through conversions or disposals which are actively being explored.

Octodec’s industrial portfolio performed relatively well over the past year. Despite the sector’s general resilience, smaller operators were negatively impacted by high interest rates and failing rail and port infrastructure, leading to some tenant failures. Consequently, vacancies increased slightly, and the portfolio’s rental growth was limited to 2.5%, or 3.8% on a like-for-like basis.

Prudent financial management

Cash generated from operations (before dividends) was at R433 million. The group’s total borrowings ended the period at R4.4 billion and the Group’s LTV was kept within Octodec’s target range at 39.2%, with all bank covenants met during the period. R400 million in funding was successfully refinanced during the period with tenors of three to five years with the weighted average cost of funding ending slightly higher at 9.5%. Post year end, a further R370 million was refinanced, and management is advanced in proactively negotiating the refinancing of a further R600 million of debt maturing in 2025. In anticipation of a declining interest rate cycle, only 68% of Octodec’s borrowings were hedged with a short weighted average term of one year. The Group ended the period with R679 million in cash and unutilised debt facilities which is sufficient for its capital commitments. 

Commenting on Octodec’s financial position, outgoing Financial Director, Anabel Vieira said “Octodec’s cash generation and prudent management of capital has ensured a robust financial position going into FY2025, with opportunities to take advantage of lower interest rates in the period ahead to reduce the cost of funding.”

Value-enhancing property Investments

Octodec is committed to maintaining the quality and relevance of its buildings. The rollout of value-added services like Wi-Fi, cashless laundry facilities and recreation areas, refurbishments of the common and entertainment areas such as those carried out at Ricci’s Place in Johannesburg and Corner Place in Tshwane, as well as the enhanced student facilities at The Fields, demonstrates this commitment.

While continuing to seek opportunities to convert and repurpose vacant office spaces, the conversion of the Prinsproes office building in the Tshwane CBD into Yethu City is in progress with leasing set to begin in January 2025. The Group remains optimistic about the prospects of this new initiative. Additionally, a solar system will be installed post-development to reduce electricity costs and provide backup power, enhancing the project’s yield.

“I am excited about the completion of Yethu City. This new offering represents a significant step forward in addressing critical market needs. By providing quality, co-living spaces at accessible prices, we are not only meeting the high demand in this sector but also playing a vital role in supporting our community by ensuring more people have the opportunity to live in secure, well-maintained accommodation. This initiative underscores our commitment to creating sustainable, inclusive communities and highlights our proactive approach to tackling housing challenges in the CBD,” added Wapnick.

In response to persistent power outages in the Johannesburg CBD and to a lesser extent in the Tshwane CBD, the Group has installed generators at several residential and office buildings to ensure operational continuity. Additionally, solar panels have been installed at Woodmead Value Mart, Blaauw Village, and Sildale Industrial Park, with a solar project at Silver Place completed post year-end. Further solar installations are planned for properties with suitable roof space, including The Fields.

Furthermore, Octodec has invested in replacing air-conditioning systems in older buildings to enhance tenant experience and reduce energy costs. Significant capital expenditure was also directed towards repurposing the ground floor of Bank Towers in the Tshwane CBD into retail space for a large national retailer, expected to boost trading densities in the area.

Cautiously optimistic outlook

Octodec is increasingly optimistic about prospects for enhanced growth following the creation of the Government of National Unity and the commencement of the interest rate cutting cycle. These developments are contributing to enhanced consumer and business confidence and spending power which will ultimately deliver economic growth. This bodes well for increased rental income and lower costs of funding for Octodec which should contribute to earnings growth in FY2025 and beyond. Additionally, lower costs of funding will enhance Octodec’s ability to carry out value-enhancing property conversions like Yethu City. Similarly, a more favourable economic environment will support the recycling of non-core assets which is a key focus in the period ahead.

The Group looks forward to Riaan Erasmus assuming his role of Financial Director and Debt Officer, as well as Deputy CEO, effective November 30, 2024. In these positions, Riaan will focus on optimising the group’s property portfolio and evaluating the internalisation of asset and property management services, alongside his primary duties as Executive Financial Director and Debt Officer.

“Riaan’s appointment marks a pivotal moment for Octodec. His extensive expertise and strategic insight will prove invaluable in propelling Octodec forward and I am excited about the future that will be built with his guidance. With the foundations set, our team is energised to drive sustainable growth and returns while leveraging a more favourable economic backdrop to ensure Octodec maximises its value creation into the future,” concluded Wapnick.

Dual role created as the REIT positions itself for growth

25 October 2024 – JSE-listed REIT, Octodec Investments Limited (“Octodec”), today announced changes to its leadership in line with its long-term succession plan aimed at growing the business sustainably.

Following the April 2024 announcement of the appointment of Riaan Erasmus as the incoming executive financial director and debt officer of Octodec, the Board is pleased to inform stakeholders that Riaan will with effect from 30 November 2024, also assume the position of deputy chief executive officer of Octodec.

In this new role, Riaan will be employed full-time by Octodec, specifically focusing on optimising the group’s property portfolio and assessing the merits of the internalisation of the asset and property management services currently provided by City Property. These responsibilities will sit alongside his primary duties as executive financial director and debt officer.

Sharon Wapnick, Chair of Octodec, said: “Succession planning has been a large focus over the last few years as we continue to plan the sustainable growth and future success of Octodec. The Board is confident in Riaan’s ability to seamlessly transition into this new dual role, providing the necessary expertise and continuity required by Octodec.”

Riaan graduated from the University of Northwest and qualified as a Chartered Accountant (South Africa) in 2008 after completing his articles with KPMG South Africa. He has extensive experience serving as an executive director, having previously held the positions of group financial manager, treasury manager and later, debt officer and financial director of Hospitality Property Fund Limited, a REIT that was listed on the JSE until 2021. In addition, Riaan served as the group treasurer managing the debt portfolio and other treasury-related transactions for the Tsogo Sun and Southern Sun group of companies from 2017 until 2022.

“Riaan has a keen passion for, and understanding of not only property, but the unique composition of Octodec’s business, and is the right person to take the portfolio to new heights. I look forward to Riaan’s contribution in his new capacity as he prepares to ultimately succeed me,” said Jeffrey Wapnick, Managing Director of Octodec.

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.”