Emira Property Fund Limited, a Real Estate Investment Trust (REIT) based in South Africa, has released its unaudited condensed consolidated interim financial results for the six months ended 30 September 2023. The report highlights key financial metrics, dividend declarations, market performance, and the company’s outlook amidst economic challenges.
Emira reported distributable earnings of R310.6 million for the current reporting period, compared to R378.7 million in the prior period. The decrease is attributed to the exclusion of interest income accrual from Inani and the higher yielding Enyuka, which was disposed of during the period. Additionally, lower distributable income from Emira’s US investments and higher interest rates on debt negatively impacted earnings.
After adjusting for these factors, the Board declared an interim dividend of 61.74 cents per share for the current reporting period, reflecting a 7.1% decrease from December 2022.
Directly held portfolio revenue saw a significant increase of 12.5% to R944.6 million compared to R840.0 million in the prior period. This growth underscores Emira’s resilience amid sluggish economic growth. The net asset value per share also showed a positive trend, increasing by 0.5% to 1,703.4 cents.
However, headline earnings per share decreased by 90.2% to 7.31 cents, and earnings per share decreased by 85.1% to 17.44 cents, signaling certain challenges in the operating environment.
Despite economic headwinds, Emira’s balance sheet remains healthy. The weaker Rand has positively contributed to the value of Emira’s US investments. Notably, the disposal of the high-yielding investment in Enyuka, along with the reinvestment of proceeds into debt, has impacted distributable income. Nevertheless, the loan-to-value ratio (LTV) has reduced to a pleasing 41.2%, indicating prudent financial management. Liquidity has also improved considerably.
Despite the challenging economic conditions, Emira’s local portfolio demonstrated resilience, with operating metrics generally improving across all sectors. This resilience is a testament to the effectiveness of Emira’s risk-mitigating sectoral and geographical diversification strategy.
Emira’s investments in the USA have, on the whole, performed well operationally. However, the report notes certain larger tenant failures that had an adverse impact on the current reporting period’s results. It emphasizes the general positive performance of US investments but acknowledges the challenges posed by specific instances.
Persistently high-interest rates emerged as a notable factor negatively affecting results. The report mentions that interest rate increases exceeded the initial expectations, contributing to the financial challenges faced by the company during the reporting period.
The Board approved an interim gross dividend of 61.74 cents per share, payable to registered shareholders on Monday, 11 December 2023. The dividend has been declared in compliance with the requirements of a “qualifying distribution” for the purposes of section 25BB of the Income Tax Act, No. 58 of 1962.
| Event | Date |
|---|---|
| Last Day to Trade (Cum Dividend) | Tuesday, 5 December 2023 |
| Shares Trade Ex-Dividend | Wednesday, 6 December 2023 |
| Record Date | Friday, 8 December 2023 |
| Payment Date | Monday, 11 December 2023 |
Share certificates may not be dematerialized or rematerialized between Wednesday, 6 December 2023, and Friday, 8 December 2023, inclusive.
In accordance with Emira’s REIT status, shareholders are advised on the tax implications of the dividend. Qualifying distributions received by local tax residents must be included in gross income. However, these distributions are exempt from dividend withholding tax for South African tax resident shareholders, provided they submit the required forms to their Central Securities Depository Participant (CSDP) or broker.
Non-resident shareholders receiving qualifying dividends will not be taxed as income but are subject to a 20% dividend withholding tax. The net amount due to non-resident shareholders, assuming a 20% withholding tax rate, is 49.39200 cents per share.
In light of local and global market uncertainty and volatility, Emira remains cautious about the future. The company emphasizes its commitment to focusing on fundamentals and elements within its control to navigate the challenging economic landscape.
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