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In the past few months Emira Property Fund has disposed of buildings worth R86m. The buildings include Mutual Mews in Rivonia Boulevard (R12m); Midrand Business Park in Midrand (R49m); and 33 Heerengracht in Cape Town (R25m).

It also has two other building worth R70m which have been sold but these sales are still conditional at this stage.

All the buildings have been disposed of at a premium to book value of around 6 – 7%.

CEO of the Emira Property Fund, James Templeton, says the proceeds from the sales, have enabled the Fund to spend up to R90m in repurchasing its own PI’s. Some of the cash has also been deployed to draw down on its current debt facilities, thereby saving the Fund interest at a rate of prime less 2.5% ie: 6,75%.

The current yield on Emira PI’s is around 9.4% whereas the yield on the buildings it is disposing of in order to effect the PI repurchase is around 7 – 8%.

Says Templeton: “We are buying back our PI’s at a higher yield than we would have achieved on the disposed of buildings, so in effect this transaction is earnings enhancing for the Fund.

Also, by taking a sizeable number of its own PI’s out of circulation, it will be effectively avoiding having to shell out distributions payable to those PI unit holders of an estimated 109.7cents per PI – a move that will once again be earnings enhancing for Emira PI holders

Templeton says further property sales are on the cards for 2012 but the intention is not to use the entire proceeds from these sales to buy back PI units or draw down debt. Ideally it will be deployed to purchase other blue chip properties where yields of around 9.5% are achievable on select Property investments, thus adding to the quality of the entire Emira property portfolio over the longer term.