Octodec interim distribution up by 9%

Posted On Monday, 18 April 2005 02:00 Published by eProp Commercial Property News
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Octodec Investments Limited announced an interim distribution of 31,6 cents per linked unit for the six-month period ended 28 February 2005.

Jeffrey WapnickOctodec Investments Limited announced an interim distribution of 31,6 cents per linked unit for the six-month period ended 28 February 2005. This represents an increase of 9% on the distribution paid for the corresponding period in 2004.

“The favourable climate of reduced interest rates and management’s proactive approach to letting, as well as a containment of operating costs, resulted in Octodec’s growth in earnings and distributions,” said Jeffrey Wapnick, Managing Director of Octodec.

“We are confident that, subject to market conditions remaining favourable, Octodec’s distribution for the second six-month period should show an increase which is in line with the distribution growth for the first six-month period,” pointed out Wapnick.

Furthermore, the half percentage point reduction in interest rates announced by Tito Mboweni yesterday will have a positive impact on Octodec’s performance and is expected to stimulate growth for this geared fund.

Headline earnings per linked unit amounted to 31,7 cents (2004: 29,6 cents), an increase of  7,1% over the previous comparative period.

Rental income and net rental income increased by 6,5% and 1,5% respectively, compared with the previous six month period ended 29 February 2004.

Income from an associate company, IPS, in which Octodec holds a 40% interest, increased significantly as a result of greater demand for residential and office space and a number of acquisitions made at attractive yields.   A successful residential sectional-title development had a further positive impact on the results.

“During the period, transfer was taken of three Johannesburg CBD properties at an aggregate purchase price of R16 million.  These acquisitions are in line with the strategic objective of acquiring quality property,” explained Wapnick.

An ongoing programme of upgrading and refurbishment continues to be key in managing the Octodec property portfolio.

The refurbishment of Killarney Mall shopping centre is ongoing and is expected to be completed in October 2005.  This includes the construction of approximately 5 500m² of additional retail space, including a two level Edgars store and an additional 430 parking bays. The cost of this project is R88 million and is expected to yield an initial 11% return. 

The vacancy factor of the portfolio remained stable at approximately 7% (2004: 7%) of total potential rental income.  Woodmead Value Mart, Killarney Mall, Elardus Park and Waverley Plaza continue to enjoy strong growth through increased consumer spending.

At 28 February 2005 Octodec’s borrowings amounted to R357 million, equating to a 44% debt to property value ratio. This level of gearing allows for future expansion.

The current weighted average cost of Octodec’s borrowings is 10,5%. Interest rates have been fixed in respect of 44% of net borrowings for periods ranging from November 2006 to November 2007.

“We are pleased to report that the company has continued to produce sustained growth in earnings to its linked unitholder” concluded Wapnick.

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