Octodec Investments boosts dividends amid resilient inner-city portfolio performance

OCTODEC Investments, a prominent JSE-listed Real Estate Investment Trust (REIT) primarily operating in Tshwane and Johannesburg, has reported a 7.6% increase in its full-year dividend, now standing at 134.5 cents per share for the year ending August 31.

- EDWARD WEST

This rise followed the declaration of a final dividend of 72.5 cents per share, showcasing the company’s commitment to returning value to its shareholders amidst a volatile economic climate.

CEO Jeffrey Wapnick, attributed an 8.2% rise in distributable income per share to a "resilient portfolio performance." The total property portfolio, valued at R11.2 billion, recorded a revenue growth of 4.6%, amounting to R2.2bn. Notably, all sectors aided this growth, with residential properties and shopping centres emerging as the strongest performers. The overall vacancy rate simultaneously improved, decreasing to 12.3% from a previous 14.9%.

"Focused strategic actions and disciplined execution saw us grow rental across all sectors, meaningfully improve occupancies, secure lower funding rates, and enhance the portfolio to drive sustainable value creation," stated Wapnick.

He said that despite persistent challenges, a gradual improvement in market confidence, alongside lower inflation and a decline in interest rates, has contributed to a more favourable operating environment.

While careful cost management ensured increases were kept in line with inflation, Octodec did note specific pressures. Property expenses rose by 4.1%, driven by above-inflation hikes in utilities, cleaning, and security costs, as well as bad debt provisions. In contrast, administrative and corporate expenses increased by 4.9%, and net finance costs increased by just 0.6% due to maturing interest rate swaps, counterbalanced by improved margins on refinanced borrowings.