Octodec Announces 2022 Interim Results

Octodec’s digitalisation initiatives yield benefits as the Group broadens its residential offering and continues to pay down debt

The Group’s balance sheet optimisation and disposal strategies have also borne fruit in an improved half-year performance characterised by reduced vacancies and renewed tenant interest.

Highlights:

  • R944.4 million rental income (28 February 2021: R898.7 million)
  • Like-for-like rental growth 1.2% (28 February 2021: (8.5%))
  • Distributable income after tax (FFO) R211.8 million (28 February 2021: R199.1 million)
  • Distributable income per share 79.6 cents (28 February 2021: 74.8 cents)
  • Net asset value (NAV) per share R23.10 (31 August 2021: R23.20)
  • Cash generated from operating activities before dividend payment R193.9 million (28 February 2021: R184.3 million)
  • Loan to value (LTV) 41.0% (31 August 2021: 43.2%)
  • All-in annual weighted average cost of funding 8.3% (31 August 2021: 8.5%)

Tuesday, 10 May 2022 – JSE listed REIT Octodec Investments Limited, today announced its interim results for the six months ended 28 February 2022, against the backdrop of subdued market recovery. While the fourth wave of Covid-19 (November 2021-January 2022) was expected to further slowdown the local economy, only minor restrictions were placed on tenants’ businesses resulting in a limited impact on Octodec’s portfolio. Consequently, fewer rental discounts were granted to tenants over the period.

Revenue earned on a contractual basis after COVID-19 rental discounts increased by 5.1% to R944.4 million from R898.7 million. At the same time, property operating expenses increased by 5.2%, mainly due to increased administered costs such as assessment rates. The group’s bad debts remain under control at 1.9% of gross revenue compared to 2.5% for the prior period.

Speaking to various operational initiatives during the year, Jeffrey Wapnick, Managing Director of Octodec, says: “Octodec has managed to contain most property costs through hands-on management of the buildings, with a focus on maintenance management, ensuring that our buildings remain attractive to its tenants.”

Portfolio

Initiatives such as the introduction of shared and/or furnished accommodation at The Fields and value-added services such as Wi-Fi to tenants in various other buildings has contributed to the increase of Octodec’s residential income by 5.6% on a like-for-like basis. This, together with a focused marketing strategy to increase letting, has also resulted in reduced vacancies in our residential buildings.

Explaining actions taken to retain and attract tenants, Wapnick comments: “There is increased residential supply by competitors in Johannesburg CBD, which is why we are maintaining our competitive edge by providing quality apartments and services at affordable prices, which has been done without major CAPEX. Due to the positive outcome of the above initiatives, we intend to roll out these programmes aggressively to more residential buildings to attract new tenants.”

The residential vacancies decreased to 7% since February 2022. Subsequent to half-year, the occupancy level improved considerably at The Fields with the students’ take-up of shared/furnished accommodation, and at Kempton Place through the increased activity at OR Tambo International Airport, with both ex- and new tenants returning to take up occupation.

Over the last two years, Octodec’s retail portfolio has felt the impact of the lockdown restrictions. Many offices and government departments are still applying the work-from-home policy, at least on a rotational basis. Therefore, footfall has not returned to pre-COVID levels in the CBDs. Nevertheless, on a like-for-like basis and excluding COVID-19 rental discounts, rental income from retail increased by 4.0%.

Wapnick says: “Although there has been a continued downward resetting of rentals across the sectors, it is pleasing to see that from an Octodec perspective, several renewals are being concluded at increased rentals, and we continue to experience demand from large retailers for space in both Johannesburg and Tshwane CBDs.”

Educational facilities and Places of worship are experiencing increased student numbers and congregants respectively. However, the period was characterised by challenging trading conditions and these institutions are only beginning to emerge from the pandemic. Encouragingly, there has been an improvement with new inquiries and collections from these two sectors.

Octodec’s office portfolio has also been adversely affected by the current weak economic climate. In addition, the oversupply of office space has put pressure on occupancy levels, which is in line with the broader sector. Although vacancies have remained stable, rental income has reduced marginally by 1.5% on a like-for-like basis and before COVID-19 rental discounts.

Octodec’s industrial portfolio has performed relatively well. However, there have been negative rental reversions and a resetting of rentals. As a result, rental on a like-for-like basis and before COVID-19 rental discounts decreased by 4.5%. Occupancy in the industrial sector has remained stable, with a number of our industrial buildings 100% occupied.

Wapnick adds: “Even though Octodec’s properties were not directly impacted by the civil unrest in 2021, the impact of the unrest on the economy partially affected Octodec’s collections during this period.”

Vacancies

As a percentage of gross lettable area, including properties held for redevelopment, vacancies have improved marginally to 22.6% compared to 22.8% at 31 August 2021. The group’s core vacancies, which exclude the GLA relating to properties held for redevelopment or disposal, decreased from 16.2% to 15.8%.

The residential sector reflected a considerable decrease in vacancies compared to August 2021. Residential vacancies reflect an improvement from 24.3% at February 2021 to 15.4% at 28 February 2022. Despite pressure on rental income in the industrial sector, the vacancies have decreased from 11.7% to 9.9%. Retail shopping centre core vacancies also improved from 7.3% to 6.0%, with Octodec’s convenience shopping centres being well let.

Disposals

“Octodec remains focused on its balance sheet optimisation, and disposal strategies to pay down debt and refinance loans where needed. Active balance sheet management and liquidity planning have shielded the business resulting in an improved LTV,” comments Anabel Viera, Financial Director of Octodec.

With the lifting of COVID-19 lockdown restrictions, Octodec has seen an improvement in the conclusion of sales of properties previously identified for sale. Against this backdrop, Octodec has sold and transferred 12 properties for a total net consideration of R121.6 million.

Dividend

The board of Octodec has declared a cash dividend of 50 cents per share for the year ended 28 February 2022. However, given the broader economic and political uncertainty, the board will not be providing any guidance on distributable income and dividends for the second half of FY2022.

Speaking to prospects in the sector, Wapnick concludes: “Consumer confidence has risen in light of the cancellation of the lockdown restrictions, and there is a renewed energy in the Tshwane CBD. However, the local macro environment remains a cause for concern. With GDP expected to grow at under 2% for the foreseeable future, we do not anticipate significant growth in rental income. In addition, inflation is also expected to increase, which will also impact our costs and ultimately, net property income. With that said, Octodec remains resilient thanks to Management’s intimate knowledge of the underlying assets in the portfolio and the broader property market.”

Octodec Announces 2021 Annual Results

A strong focus on property fundamentals and robust portfolio ensures measured Octodec performance amid challenging low growth environment

  • Distributable earnings before tax of R401.1 million, a decrease of 4.6%
  • Reduction in the all-in annual weighted average cost of borrowings to 8.5% (FY20: 8.7%)
  • Rental relief granted in support of tenants through rental discounts substantially reduced to 1.6% of rental income
  • Generally strong level of collections, averaging 100% over the year
  • 0,4% increase in vacancies indicative of stability returning
  • Active balance sheet management and liquidity planning showing results
  • Robust and encouraging post-reporting period property fundamentals

Tuesday, 2 November 2021 – JSE listed REIT Octodec Investments Limited, today announced its annual results for the year ended 31 August 2021, against a weakened economic environment. COVID-19 and the consequent lockdowns and restrictions that continued through FY2021 significantly impacted Octodec’s performance.

Octodec’s distributable income decreased by 4.6% before tax and 14.1% after tax, mainly attributable to a reduction in rental income caused by rent relief granted to their tenants who were detrimentally affected by the COVID-19 lockdown restrictions, negative rental reversions and an increase in residential vacancies for a significant portion of the year.

Jeffrey Wapnick, Managing Director of Octodec, commented: “The lockdown severely impacted certain sectors due to their level of social interaction, such as hospitality, places of worship and universities and colleges, many of which had moved their tuition online during the year.”

The rental relief granted through rental discounts, decreased significantly to 1.6% of rental income (FY2020: 5.3%), On a like-for-like basis, before the COVID-19 rental discounts granted, overall rental income decreased by 7.3%. In addition, rental income from the residential sector and specialised sectors decreased by 10.6% and 15.4%, respectively, mainly attributable to the impact that COVID-19 and the lockdown had on these sectors.

A decrease in collections, specifically during January and February 2021 was primarily due to typically slower collections in these months. Although Octodec’s properties did not suffer damage during the civil unrest in July 2021, this did have a temporary impact on collections.

A longer business recovery period was expected for tenants in the education, places of worship and hotel sectors resulting in lower collection levels. However, these sectors represent only 3.7% of Octodec’s total rental income, and total collections have remained at acceptable levels.

Explaining actions taken to retain and attract tenants, Wapnick said: “Our smaller retail tenants and restaurants rely on foot traffic from residential and office tenants, and the hybrid working model has affected their turnover. Octodec has responded to the challenging environment through various initiatives such as the ongoing roll-out of Wi-Fi to residential buildings and the embedding of online applications forms on our recently upgraded digital platform. These enhanced digital capabilities, as well as the broadening of our offering, including newly furnished apartments and shared accommodation at The Fields, to our expanded tenant demographic, forms part of our forward-looking strategy as we position the Group for growth.”

Vacancies relatively well contained
Vacancies in the Octodec portfolio including properties held for redevelopment, increased by 1.1% to 22.8% of the gross lettable area (GLA) (FY2020: 21.7%). The Group’s core vacancies, which exclude the GLA relating to properties held for development, increased by 0.4% to 16.2% (FY2020: 15.8%).
The commercial sector experienced increased vacancies, primarily as a result of COVID-19, which impacted trading conditions and resulted in tenant failures.

Retail shopping centres, comprising mainly convenience and neighbourhood centres, which remain well let with low vacancies, proved to be relatively defensive in this environment. Speaking to the impact of COVID-19 in the year, Wapnick said: “Initially, the majority of our commercial tenants were afforded rental relief in the form of discounts rather than deferrals or payment plans, especially small, medium and microenterprises (SMMEs) which continue to be the most affected. However, more recently, with each lease renewal, tenants are looking for reduced rentals rather than a once-off discount. Tenant retention remains a high priority for Octodec and we continue to engage with tenants to ensure that tenants survive the adverse effects of the pandemic.”

Against this backdrop, Octodec has strengthened its balance sheet to ensure prudent financial management. Octodec has continued to generate good cash flows in spite of the challenging circumstances, with 100% of billings collected during the year. Additionally, no covenants have been breached, and Octodec’s interest-cover-ratio (ICR) was within the limit for each lender.

“The effects of COVID-19 still linger but the diversified and granular nature of the portfolio, together with Management’s intimate knowledge of the portfolio and the broader property market have stood the business in good stead. In addition, active balance sheet management and liquidity planning have shielded the business. We will continue to take proactive steps to mitigate the reduction in earnings, optimise working capital and preserve cash flow and liquidity, thereby protecting the business,” commented Anabel Viera, FD of Octodec.

Dividend Declaration
The board of Octodec has declared a dividend of 50 cents per share for the year ended 31 August 2021. The decision to reduce the dividend is aligned to Octodec’s strategic objective to reduce debt, strengthen its balance sheet and conserve cash for essential capital expenditure, whilst retaining its REIT status.

“The decision to reduce the dividend is in line with Octodec’s decision to pay out the minimum distribution requirement to retain its REIT status while utilising the available assessed losses in the Group. While we remain cautious on the outlook, we are well-positioned to navigate the market challenges into the recovery phase. There are green shoots and early signs that the worst of COVID-19 may be behind us,” concludes Wapnick

Interim performance reflective of ongoing COVID-19-related pressure on tenants and the trading environment

Benefit of strategic actions and initial signs of recovery coming through in early H2 trading
• Distributable earnings of R199 million weighed down by Covid-19 implications
• Rental income including rental discounts of R26 million, down 10.8% at R899 million
• Generally strong level of collections, averaging 95% over the period
• 3% increase in vacancies due to weak trading environment and unusual leasing cycle
• Seven non-core properties disposed of for a total of R26 million
• Active balance sheet management and liquidity planning protected the business
• Robust and encouraging post-reporting period property fundamentals

JSE listed REIT Octodec Investments Limited, today reported its results for the six months ended 28 February 2021, against a weak economic environment exacerbated by the COVID-19 pandemic and country lockdown. COVID-19 implications saw some residential tenants return to their family homes, increased unemployment, certain business failures and overall reduced affordability which weakened the trading environment and impacted the Group’s performance.

Tenant relief of R26 million, mainly in the form of discounts selectively granted to the worst affected tenants, was greatly reduced compared to the past six months and rental collections remained high averaging 95%. However, the rise in vacancies, particularly in the residential and retail shops sectors, lower rentals on renewal of leases added to the loss of rental income which ended down 10.8% for the half-year. Despite property costs being mostly contained, and reduced administrative and finance costs, distributable earnings declined to R199 million.

Jeffrey Wapnick, Managing Director of Octodec commented: “The social and economic fallout from COVID-19 lockdown restrictions weighed on our tenant base and consequently on our performance. Octodec has survived 63 years of economic cycles and we are confident that we have taken the necessary steps to proactively respond to challenges and position the business to benefit from a recovery. Octodec’s resilience is underpinned by, management’s intimate knowledge of the portfolio and markets, the diversified portfolio and granular tenant base, strong cash generation and prudent financial management.”

Occupancy levels were down 3% overall, driven mainly by the usual peak in residential vacancies experienced at the end of the calendar and academic year, followed by a delayed uptick in leasing in the new year. Commercial vacancies, save for retail shops, were relatively stable owing to continued demand for Octodec’s quality offering and active leasing. The retail shopping centres portfolio comprising mainly convenience and neighbourhood centres, proved to be defensive given its limited vacancies and ongoing support from consumers.

During the period, a digital leasing system was implemented and an emphasis was placed on digital marketing to attract new tenants. The rollout of Wi-Fi to residential buildings was expedited with a few completed during the period, ensuring that these buildings remain relevant and attractive to tenants. Additionally, furnished apartments and shared accommodation were introduced at The Fields in Hatfield with a second phase successfully launched during the period.

Speaking to the post reporting period improvements in trading experienced, Wapnick said: “The city ‘buzz’ is back with the return of people to the city centres and virtually all retail tenants are trading. Leasing activity has picked up across sectors and we are seeing renewed confidence from national tenants to commit to leases. Residential vacancies have come down nicely following the delayed start to the tertiary academic year and rental payment patterns are becoming more predictable with collections averaging 99%. The benefits of our digital marketing push and enhanced digital leasing capabilities are also beginning to come through in the form of increased leasing activity, cost efficiencies, ease of transacting and improved customer service as well as an extension of our target market reach.”

In line with the decision taken by management to preserve cash, Octodec did not undertake any major new developments and instead focused on maintaining and carrying out smaller upgrades of properties or lease-driven projects. The business completed the refurbishment of Leo’s Place, a residential property in Tshwane Arcadia, at a total cost of R11.7 million, which included a recreational area and the renovation of the common areas to a more contemporary look that appeals to the younger occupants.

Octodec continued with active marketing of the properties held for sale and entered into numerous conditional agreements with buyers. In the current environment, it is difficult for buyers to secure funding, drawing out the disposal process. During the period, the Group disposed of seven properties for a total consideration of R26.3 million. Three of these properties transferred for a total consideration of R6.5 million and transfer of the remaining properties is expected to take place before the end of the financial year.

Octodec finished the period on a sound financial footing with sufficient facilities available to honour commitments. Cash generation during the period remained strong at R388 million and unutilised available banking facilities totalled R313 million. Management proactively addressed short term loan expiries and extended swap maturities while also managing covenant headroom and flexibility. The group’s LTV was 44.2%, well within bank covenant levels of 50% despite the 4,3% devaluation of the property portfolio to R11.3 billion.

“We are comfortable with the Group’s financial position and our solid banking relationships continue to serve us well in our proactive and constructive engagements with funders, who are supportive. Cash flow discipline remains a key focus and we are closely monitoring vacancies and rental payment trends to ensure robust liquidity planning and management,” commented Anthony Stein, FD of Octodec.

Due to ongoing uncertainty around subsequent waves of infection and further lockdown restrictions, no interim dividend has been declared. The decision around a final dividend will be made at the time of the release of the annual results. Management is committed to the Group strategy and is continuously exploring innovative initiatives to unlock value in the properties.

“While we remain cautious on the outlook and it is early days, we are encouraged by the green shoots we are seeing in improved occupancies, collections and leasing activity since March and are hopeful that this is an indication that the worst is behind us. We will continue to be responsive to the dynamic environment by actively managing the portfolio and factors within our control, positioning the Group to navigate the headwinds and take advantage of a change in tide,” Wapnick concluded.

Octodec Announces 2021 Interim Results

Interim performance reflective of ongoing COVID-19-related pressure on tenants and the trading environment

Benefit of strategic actions and initial signs of recovery coming through in early H2 trading

  • Distributable earnings of R199 million weighed down by Covid-19 implications
  • Rental income including rental discounts of R26 million, down 10.8% at R899million
  • Generally strong level of collections, averaging 95% over the period
  • 3% increase invacancies due to weak trading environment and unusual leasing cycle
  • Seven non-core properties disposed of foratotal of R26 million
  • Active balance sheet management and liquidity planning protected the business
  • Robust and encouraging post-reporting period property fundamentals

Wednesday, 21 April 2021 –JSE listed REIT Octodec Investments Limited, today reported its results for the six months ended 28 February 2021, against a weak economic environment exacerbated by the COVID-19 pandemic and country lockdown.COVID-19implications saw some residential tenants return to their family homes, increased unemployment, certain business failures, and overall reduced affordability which weakened the trading environment and impacted the Group’s performance.

Tenant relief of R26 million, mainly in the form of discounts selectively granted to the worst affected tenants, was greatly reduced compared to the past six months and rental collections remained high averaging 95%. However, the rise in vacancies, particularly in the residential and retail shops sectors, lower rentals on renewal of leases added to the loss of rental income which ended down 10.8% for the half-year. Despite property costs being mostly contained, and reduced administrative and finance costs, distributable earnings declined to R199 million.

Jeffrey Wapnick, Managing Director of Octodec commented: “The social and economic fallout from COVID-19 lockdown restrictions weighed on our tenant base and consequently on our performance. Octodec has survived 63 years of economic cycles and we are confident that we have taken the necessary steps to proactively respond to challenges and position the business to benefit from a recovery. Octodec’s resilience is underpinned by, management’s intimate knowledge of the portfolio and markets, the diversified portfolio and granular tenant base, strong cash generation and prudent financial management.”

Occupancy levels were down 3% overall, driven mainly by the usual peak in residential vacancies experienced at the end of the calendar and academic year, followed by a delayed uptick in leasing in the new year. Commercial vacancies, save for retail shops, were relatively stable owing to continued demand for Octodec’s quality offering and active leasing. The retail shopping centres portfolio comprising mainly convenience and neighbourhood centres, proved to be defensive given its limited vacancies and ongoing support from consumers.

During the period, a digital leasing system was implemented and an emphasis was placed on digital marketing to attract new tenants. The rollout of Wi-Fi to residential buildings was expedited with a few completed during the period, ensuring that these buildings remain relevant and attractive to tenants. Additionally, furnished apartments and shared accommodation were introduced at The Fields in Hatfield with a second phase successfully launched during the period.

Speaking to the post reporting period improvements in trading experienced, Wapnick said: “The city ‘buzz’ is back with the return of people to the city centres and virtually all retail tenants are trading. Leasing activity has picked up across sectors and we are seeing renewed confidence from national tenants to commit to leases. Residential vacancies have come down nicely following the delayed start to the tertiary academic year and rental payment patterns are becoming more predictable with collections averaging 99%. The benefits of our digital marketing push and enhanced digital leasing capabilities are also beginning to come through in the form of increased leasing activity, cost efficiencies, ease of transacting and improved customer service as well as an extension of our target market reach.”

In line with the decision taken by management to preserve cash, Octodec did not undertake any major new developments and instead focused on maintaining and carrying out smaller upgrades of properties or lease-driven projects. The business completed the refurbishment of Leo’s Place, a residential property in Tshwane Arcadia, at a total cost of R11.7 million, which included a recreational area and the renovation of the common areas to a more contemporary look that appeals to the younger occupants.

Octodec continued with active marketing of the properties held for sale and entered into numerous conditional agreements with buyers. In the current environment, it is difficult for buyers to secure funding, drawing out the disposal process. During the period, the Group disposed of seven properties for a total consideration of R26.3 million. Three of these properties transferred for a total consideration of R6.5 million and transfer of the remaining properties is expected to take place before the end of the financial year.

Octodec finished the period on a sound financial footing with sufficient facilities available to honour commitments. Cash generation during the period remained strong at R388 million and unutilised available banking facilities totalled R313 million. Management proactively addressed short term loan expiries and extended swap maturities while also managing covenant headroom and flexibility. The group’s LTV was 44.2%, well within bank covenant levels of 50% despite the 4,3% devaluation of the property portfolio to R11.3 billion.

“We are comfortable with the Group’s financial position and our solid banking relationships continue to serve us well in our proactive and constructive engagements with funders, who are supportive. Cash flow discipline remains a key focus and we are closely monitoring vacancies and rental payment trends to ensure robust liquidity planning and management,” commented Anthony Stein, FD of Octodec.

Due to ongoing uncertainty around subsequent waves of infection and further lockdown restrictions, no interim dividend has been declared. The decision around a final dividend will be made at the time of the release of the annual results. Management is committed to the Group strategy and is continuously exploring innovative initiatives to unlock value in the properties.

“While we remain cautious on the outlook and it is early days, we are encouraged by the green shoots we are seeing in improved occupancies, collections and leasing activity since March and are hopeful that this is an indication that the worst is behind us. We will continue to be responsive to the dynamic environment by actively managing the portfolio and factors within our control, positioning the Group to navigate the headwinds and take advantage of a change in tide,” Wapnick concluded.

Octodec Announces 2020 Interim Results

OCTODEC DELIVERS SATISFACTORY FIRST HALF PERFORMANCE IN RECESSIONARY ENVIRONMENT; PREPARES FOR COVID-19 IMPACTS ON FULL YEAR PERFORMANCE

• Reduction in commercial vacancies achieved on back of successful upgrades
• 9 non-core assets sold for R145 million; 5 transferred during the period
• Continued balance sheet optimisation and prudent financial management
• Distributable earnings of 97 cents per share retained to bolster cash position

Wednesday, 22 April 2020 – JSE listed REIT Octodec Investments Limited, today announced a satisfactory set of results for the half year to 29 February 2020, against a rapidly degrading economic environment which translated into a slight reduction in distributable earnings to 97 cents per share. The board opted not to declare a dividend for the period in order to bolster Octodec’s cash position as it prepares to face very uncertain circumstances, exacerbated by Covid-19.

Total rental income grew by R29.6 million or 3.0% compared to the prior year despite recessionary conditions placing strain on tenants. The core portfolio, represented by those properties held since the previous comparable period, with no major development activity, reflected like-for-like rental income growth of 2.2%. Property costs increased mainly as a result of escalating repairs and maintenance costs necessary to ensure Octodec’s quality offering. The Park, a community shopping centre in Tshwane, received a fresh modern look, attracting new tenants including Pick n Pay Clothing, Ackermans, Gadgets Galore and an improved food offering.

Jeffrey Wapnick, Managing Director of Octodec explained: “We are satisfied with the Group’s reasonable performance given the recessionary environment and difficult trading conditions faced. Some pleasing progress was made towards certain strategic objectives that were set for the period; particularly the reduction of commercial vacancies, completion of value-enhancing smaller upgrades, recycling of capital through the sale of non-core or underperforming assets, and successful negotiations for the signing of our government leases, with 18 concluded just post period end.

“The emergence of COVID-19 has brought many challenges, chief among them being uncertainty. The fast evolving situation required swift responses from management, led by our COVID-19 task team, to ensure business continuity. In addition to the health and safety measures which have delivered as planned, we have refocused our strategic objectives around strengthening our balance sheet and bolstering our cash resources. To this end, we have decided to retain distributable earnings but also halt new projects and expenditure on existing upgrades.”

Occupancy levels were stable during the period, with total and core vacancies of 17.9% and 11.7% respectively. Reduced vacancies were achieved across all of the commercial sectors with the most notable being in the industrial and shopping centre portfolios on the back of recent successful refurbishments which attracted new tenants or higher rentals. Occupancy levels in the residential sector, which were impacted by reduced tenant affordability and increased competition in the Johannesburg CBD, are a key focus with various value-adding marketing initiatives introduced to improve uptake in the later part of the first half. Wi-fi is in the process of being rolled out to most residential buildings and furnished accommodation is being offered at The Fields on a trial basis.

Octodec disposed of nine assets during the period valued at R145 million, at a combined premium to book value, validating the quality of its assets. Such asset sales are a key part of Octodec’s strategy with proceeds used to pay down debt and support strategic upgrades.

“We have always taken a prudent approach to managing our capital and took advantage of attractive interest rates to increase our hedged position and reduce interest rate risk during the period. We also proactively addressed short term loan expiries and entered into discussions with alternative funders to diversify our funder profile. Post period end, we successfully secured loan facilities with Absa totalling R450 million.

“We are actively managing headroom and flexibility and continually engaging with all of our funders. Our cash resources and undrawn banking facilities total more than R600 million and we are comfortable with our liquidity position based on a number of stress tests that we have run,“ commented Anthony Stein, FD of Octodec.

The ongoing uncertainty and socioeconomic impacts of the global pandemic are expected to weigh down on Octodec’s performance for the remainder of the year, although it is too soon to effectively quantify the impact on earnings. Any future guidance provided on distributable income and pay-out ratios will depend on the impact of these factors, Octodec’s capital requirements and future performance as well as proceeds received from the sale of properties.

“We will continue to take proactive steps to protect Octodec by optimising working capital, preserving cash flow and maintaining liquidity whilst mitigating the reduction in earnings. Strategic stakeholder engagements are ongoing to support the broader value chain, including industry level discussions to ensure the sustainability of the industry.

“Octodec has been around over 50 years and survived through many difficult cycles. Whilst the challenges faced by individuals and businesses, big or small, are unprecedented, we will leverage all the experience available across our business to navigate the challenges ahead,” Wapnick concluded.

ENQUIRIES
Instinctif Partners 011 447 3030
Louise Fortuin 071 605 4294
Bandile Nkambule 073 925 6545

www.octodec.co.za
071 353 9643 082 608 6587

  • Octodec is a Real Estate Investment Trust (“REIT”) listed on the JSE Limited (“JSE”) and invests in the residential, retail, shopping centre, office, industrial property and specialised sectors. Octodec’s portfolio which comprises 294 properties mostly located in the Tshwane and Johannesburg CBDs, is valued at R13 billion. Octodec is focussed on and committed to the continued investment into the Johannesburg and Tshwane city centres which offer growth potential.
  • Jeffrey Wapnick, the Managing Director of Octodec Investments since 1998, is responsible for the effective management of the company with a strong emphasis on the upgrades and redevelopment of properties. He holds various other directorships of unlisted companies including City Property Administration Proprietary Limited where he is the managing director. He is a member of the risk committee of Octodec Investments Limited.
  • The Wapnick family has a long history of experience in the property industry and holds a significant stake in Octodec, aligning their interests with those of other shareholders. Management has played an integral role in the running of the portfolio for over 25 years and therefore has an intimate knowledge of every asset and solid relationships with tenants. City Property as the asset and property manager has been managing Octodec for many years and has a wealth of experience in property management, specifically in the Tshwane and Johannesburg city centres and in the residential sector.

Octodec partners with Raizcorp

Octodec partners with Raizcorp to launch enterprise and supplier development programme

On Thursday, 6 February Octodec held the launch of its enterprise and supplier development programme in Sandton, Johannesburg, during which the first eight entrepreneurial beneficiaries were introduced.

Powered by leading business incubator Raizcorp, the Octodec ESD programme aims to enhance the impact, sustainability and profitability of the selected participants. The candidates are receiving internationally accredited entrepreneurial learning, individual business guidance, access to infrastructure, access to specialists and back-office support.

Says Jeffrey Wapnick, Managing Director at Octodec Investments Limited, “Octodec is passionately committed to enhancing and developing our existing suppliers to improve their long-term sustainability and profitability.

This is not simply a tick-box exercise for us. Our aim is to make these businesses scalable and more commercially viable so that they have the potential to become suppliers to other large companies as well. In addition, we want to grow and develop smaller enterprises to the point where they can also become part of our supply chain.”

Sharon Venn, manager of Raizcorp’s Sandton Prosperator (incubator), “As Octodec’s preferred ESD partner, Raizcorp is looking forward to working with them to create a real impact on their selected entrepreneurial businesses. They have already been very closely involved in our process to select the right programme beneficiaries – a combination of some of their current suppliers as well as potential suppliers. It really is a privilege to work with a company that involves and immerses itself so meaningfully in the entire process.”

The eight beneficiaries who have been selected are:

Pre-incubation enterprise development
· Akash Gopie of CY Trading (printing)
· Tumelo Nyepela of Blue Pepper Developments Pty Ltd (building and construction)
· Lucia Maluleke of Luckat Projects (building and construction)

Supplier development
· Arthur Matlala of Isipetho Ndaba Investments (construction and building maintenance)
· Celethé Lingham of Serviply Pty Ltd (cleaning services)
· Hillary Molotsi of Apogee Management Projects Pty Ltd (building and construction)
· Mokothula Makhari of Masmur Management Pty Ltd (building and construction)

Enterprise development
· Johannes Bafana Mokwena of Dikwena M Trading CC (building and construction)
· Mangalani Neduvhuledza of NED Consortium (engineering)

“I want my business to grow into a profitable one. I am confident that the Octodec programme will help me get my business to where I know it should be,” says Akash Gopie.

Arthur Matlala adds, “I am looking for guidance on how to implement systems that will guarantee growth for my business and make it profitable. I thought I knew what I was doing until I started on the programme which has already challenged me to come out of my shell.”

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