Octodec, donated 500 Dignity Packs to Unchain Our Children

Octodec, sister company of City Property, donated 500 Dignity Packs to Unchain Our Children

Watching a crane at City Property Pretoria lowering 500 dignity packs for boys, girls, and women into Unchain Our Children’s trailer Tuesday morning, was watching many prayers being answered in front of our eyes. Top quality personal hygiene items, soft toys, sweeties, towels, and facecloths were among the carefully selected items were packed by the staff for distribution among abused children and survivors of gender-based violence.

As statistics are skyrocketing and cases of child abuse, neglect, abandonment, exploitation, and trafficking are being reported daily, Octodec dignity pack brings joy to these survivors as they realize someone is caring enough to have blessed them with a beautiful gift of something special just for them.

Wayne van Onselen, Founder and Executive Director Unchain Our Children was invited to meet with the Managing Director of Octodec, Mr Jeffrey Wapnick. Mr Wapnick has a quest for inner city revival and rejuvenation. His management team shared with us their Change Our City For Good campaign and every story was alive with passion, enthusiasm and dedication describing their projects focussing on the upliftment of the vulnerable in our society.

“Make it Happen”, is the motto of Mr Wapnick. We were privilege to have experienced not only his dynamic business demeanour but also his sincerity and dedication to give back to the community. An accomplished entrepreneur, his vision for mid-city make-overs exceeds all expectations.

With an impressive portfolio of commercial-, industrial-, retail-, office and apartment properties in Pretoria and Johannesburg, Octodec is celebrating more than 50 years of providing beautiful spaces for living life.

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.”

Octodec Announces 2019 Annual Results

DIVERSIFICATION AND ACTIVE MANAGEMENT UNDERPINS OCTODEC’S FY19 RESILIENCE

• Stable 200.9 cents dividend per share, in line with management’s guidance
• 19 non-core assets sold for R213 million, 11 transferred during the period
• Continued balance sheet optimisation and prudent financial management

JSE listed REIT Octodec Investments Limited, today announced its full year results, declaring a stable distribution of 200.9 cents per share, in line with guidance, and representing a marginal 1.2% decrease on the prior year against the prevailing poor economic and consumer environments.

Total rental income grew by R97.1 million or 5.1% compared to the prior year, supported by increased rental income from Sharon’s Place and consolidation of wholly owned subsidiaries. No major development activity was undertaken during the past year and the core portfolio, represented by those properties held since the previous comparable, reflected like-for-like rental income growth of 2.0%. Property costs increased as a result of escalating repairs and maintenance costs. Bad debt write-offs and provisions remained stable whilst administrative costs remained tightly controlled, showing a decrease of 5.3% on the prior year.

Jeffrey Wapnick, Managing Director of Octodec explained: “The persisting weak environment continued to put strain on all our tenants leading to relatively muted growth in our rental income. Against this backdrop, we have continued to position our diversified portfolio to withstand tough trading environments to ensure that we are able to continue to provide shareholders with sustainable value in the long term.

“We have successfully navigated a challenging period through our active management focused on vacancies management, smaller upgrades of existing assets to unlock value and the recycling of capital through the disposal of non-core or underperforming properties.”

Occupancy levels were stable during the period, showing a slight decrease in both total and core vacancies of 17.9% and 11.5% respectively. The most notable reduction was in the industrial sector. Improved occupancy levels at Killarney Mall and Woodmead Value Mart reduced shopping centre vacancies significantly. The Park (previously Elardus Park) experienced slightly higher vacancies while the centre was being upgraded. The upgrade has already resulted in several national tenants signing new leases. While the decision was made not to undertake significant developments, several smaller projects are underway which will improve occupancy levels, enhance the value of the portfolio and contribute to the upliftment of the areas in which Octodec is predominantly invested.

“The disposal of 19 assets during the period valued at R213 million were concluded at premiums to book value. This process validated the quality of our assets and reflect our realistic approach to property valuations. The proceeds from asset sales will be used to pay down debt and support strategic upgrades. We have also continued to strengthen our balance sheet by reducing our exposure to interest rate risk and we are committed to reduce our LTV,” commented Anthony Stein, FD of Octodec.

A total of nineteen properties were sold during the period for a total value of R213 million. Eleven of these properties were transferred during the period for a total consideration of R129.2 million at an average combined exit yield of 5.7% and 2.6% premium to book value. Transfer of the remaining eight properties will take place in the first half of the new financial year for a total consideration of R83.7 million at an average combined exit yield of 12% and 2.7% premium to book value. In addition, Octodec has approved the disposal of five more non-core properties with a carrying value of R125.6 million.

Wapnick concluded: “The way in which we manage Octodec provides us with a high level of control and is based on management’s experience through many cycles over the past 40 years. We continue to position our portfolio to be resilient in nature, underpinned by the diversity of the portfolio, large tenant base, sound operating fundamentals and prudent capital management.”

South Africa’s muted growth outlook is not sufficient to support a meaningful improvement in Octodec’s operating environment in the short term and future distributions are expected to remain in-line with the current period. As previously indicated, any meaningful improvement in the environment should provide the stimulus necessary for Octodec to resume distribution growth.

ENQUIRIES
Instinctif Partners
Gift Dlamini Frederic Cornet
www.octodec.co.za
011 447 3030
082 608 6587 083 307 8286

NOTES TO EDITORS

• 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 285 properties mostly located in the Tshwane and Johannesburg CBDs, is valued at R12.8 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.

X