Commercial and Industrial Property - Leasing and Sales
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| Property operating costs, as a percentage of gross income, trended sharply up in 2022 which applied pressure on property owners’ bottom-lines. As a percentage of gross income, total operating costs increased 270 basis points to 43.4% at the end of 2022. This deterioration in the gross cost to income ratio came about as a result of total operating costs growing by 19.4% while gross income grew by 11.7%, according to SAPOA’s latest Operating Costs Report. Gross income was driven by a higher growth in tenant recoveries as opposed to growth in contractual base rental. In 2022, base rentals increased by 8.2% while fixed recoveries and variable recoveries increased by 15% and 23.3% respectively. The consolidation of Polish REIT EPP has guided Redefine Properties’ distributable income for the six months ended February 2023. The REIT published its interim results earlier this week, reporting a 7.2% increase in its distributable income to R1.6bn (with the consolidation contributing R0.3bn) from R1.5bn during HY2022 and declaring an interim dividend of 20.32 cps which represents an 85% payout ratio. The company’s SA REIT loan-to-value (LTV) increased to 40.9% (FY2022: 40.2%) with its SA REIT Net Asset Value per share having increased to 750.76 cents (FY2022: 720.8 cents). 2023 may prove to be a slower year for commercial property owners when compared with 2022, despite interest rates possibly having reached their peak, according to FNB Commercial Property Finance. Property brokers operating in the sector have indicated lower sales activity during Q1 2023 when compared with Q4 2022, pointing towards sales activity peaking last year but showing signs of decline more recently. Equites Property Fund is shifting its acquisition and development focus on SA where it has witnessed “unabating demand” for warehousing space while factoring in the change in market fundamentals in the UK. The REIT published its full-year results ending February 2023 reporting 4.1% growth in its annual distribution per share to 169.60 cents and declaring a final gross dividend of 88.02 cps. The Futuregrowth Community Property Fund (Comprop) has acquired the recently developed, regional shopping centre Sam Ntuli Mall (pictured) in Katlehong, bringing its portfolio to 24 shopping centres with a total GLA of more than 420 000m2, valued in excess of R7.3bn. The 30 276m2 shopping centre is anchored by Shoprite, Pick n Pay, Boxer, and Cashbuild with an internal mall as well as a number of line shops trading directly onto an expensive parking area that includes several drive-thru offerings. |
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