Octodec Investments Limited has posted its interim results for the six months ended 28^th February 2025, reporting revenue growth of 5.2% at R1.1 billion with a reduction in its core vacancies to 13.7%.

With its overall portfolio valued at R11.3 billion, the REIT’s shopping centres recorded core vacancies of 0.8% (excluding Killarney Mall which is held for sale). Its retail portfolio achieved rental income growth of 6.2% to R91 million.

While rental income from its retail street shops rose 1.4% on a like-for-like basis with the disposal of assets with high vacancies supporting an improvement in occupancy from 86% to 87.4%, the Group acknowledges the impact of macroeconomic challenges and infrastructure constraints on this retail segment, most notably Lilian Ngoyi Street that is undergoing repairs in Joburg CBD, which contributed to elevated core vacancies of 21.9% in these affected properties.

Octodec’s office portfolio recorded like-for-like rental income growth of 6.4% to R151 million, when excluding a net lease adjustment applied in the comparative period, with core vacancies improving slightly from 24.3% to 23.4%.

Its industrial portfolio comprising smaller warehouses and light industrial assets delivered retal income growth of 5.1% on a like-for-like basis with a decrease in vacancies to 8.7%.

The Group’s residential portfolio recorded above-inflation rental income growth of 5.1% on a like-for-like basis with vacancies above the comparative period of 8.4%. The Hatfield properties benefitted from pre-approval of NSFAS funded students, recording a decline in vacancies of 3.1%.

During the period, Octodec sold 10 non-core properties at a weighted average exit yield of 8.4%, receiving R49 million in net proceeds. The Group says several capital investment projects were undertaken including the installation of solar panels at The Fields and The Park Shopping Centre, an upgrade to Waverley Plaza and improvements at its government-tenanted Rentmeester Park and the Bank Towers.

Cash generated from operations (before dividends) was 25% higher at R270 million with the Group’s total borrowings closing the period at R4.4 billion.

Effective 30^th November 2024, R970 million in funding was financed at improved margins with tenors of three to four years with the weighted average cost of funding closing the period at 9.4% due to expired interest rate swaps. Octodec says that management is negotiating the refinancing of a further R650 million of debt maturing at the end of August 2025.

The Group’s borrowings were within its hedging target of between 50% and 60% in the short to medium term (51%) with R692 million in cash and unutilised banking facilities at the close of the period. Its loan-to-value (LTV) ratio decreased to 38.5% (FY2024: 39.2%).

Octodec declared a cash dividend of 62 cents per share for the reporting period.