Octodec Investments has posted its results for the year ended 31^st of August 2025, reporting a 4.6% increase in revenue to R2.2 billion. While all the sectors in which it operates contributed to the growth, its residential assets and shopping centres were the strongest performers.

“I’m proud of the progress achieved this year. Focused strategic actions and disciplined execution saw us grow rental across all sectors, meaningfully improve occupancies, secure lower funding rates, reduce debt and enhance the portfolio to drive sustainable value creation. Despite facing familiar challenges, renewed market confidence, lower inflation and declining interest rates created a more favourable operating environment which supported the overall strong performance,” comments CEO, Jeffrey Wapnick.

Octodec’s residential portfolio recorded a decrease in vacancies from 9.2% to 8% with a 5.4% increase in rental income. Improved occupancy at The Fields, which benefitted from an increase in the NSFAS accommodation allowance and pre-approval of NSFAS funded students, had an impact.

Its portfolio of largely convenience shopping centres recorded reduced core vacancies of 6.9% (FY2024: 10%) or 0.5% excluding Killarney Mall which was held for sale during the period. Octodec’s 50% JV with Blaauw Village, a neighbourhood shopping centre in Pretoria North, delivered an 81.8% increase in income, primarily due to rental income growth and cost efficiencies. Rental income from all Octodec’s retail assets recorded growth of 6.2%.

However, its portfolio of street retail in Johannesburg remained challenged by tenant sustainability compounded by the impact of the unrepaired damage on Lilian Ngoyi Street. Rental income increased by 1.2% or 2% on a like-for-like basis while core vacancies declined from 14% to 12%.

Lilian Ngoyi Street in Johannesburg CBD remained under repair for the full financial year, having reopened in mid-September 2025.

The Company says that although vacancies persisted in its office portfolio, smaller, affordable spaces continued to attract niche operators and small businesses with its strategy to repurpose underutilised office buildings in selected locations. Core vacancies decreased from 24.3% to 20.8%, partially due to the disposal of an asset in Johannesburg while rental income increased by 4.9% or 8% on a like-for-like basis, helped by lease adjustments relating to certain government renewals.

Its industrial portfolio, supported by demand for smaller, flexible spaces suited to SMEs, reported a decline in core vacancies from 10% to 5.6%, mainly driven by the letting of several larger spaces, with rental income up by 2.4% or 6.1% on a like-for-like basis.

The REIT’s total core vacancies decreased from 14.9% to 12.3% with collections at 99% of total billings.

During the period, Octodec invested R102.5 million in developments, improvements, and larger tenant installations, most notably the completion of Yethu City – On Sisulu at a cost of R45.5 million with R27.3 million incurred during the reporting period. The Company says the estimated marginal yield is between 11% and 12% and it is expected to be enhanced by electricity cost savings from the solar power installation.

17 non-core smaller properties were sold for total net proceeds of R152.3 million, at a weighted average exit yield of 9.5%. One small property, which is complementary to the Rentmeester Office Park, was acquired for R8 million, with a first-year yield of 9.3%. Proceeds from disposals were applied towards debt, reducing outstanding borrowings from R4.4 billion to R4.3 billion.

Five additional properties were disposed of post year-end at a gross consideration of R48.4 million.

R1.6 billion of bank funding was successfully refinanced and R155 million in unsecured corporate bonds were issued, all at improved margins, with tenors ranging between three to five years. The Company’s hedged position ended the year at 71.9% of borrowings.

The reduction in borrowings, together with a slight increase in the portfolio value led to a decrease in the group’s LTV from 39.2% to 38.2% with its all-in weighted average cost of borrowings having declined from 9.5% to 9.1% and ending the period with unutilised available banking facilities of R800 million. A further R200 million in unsecured corporate bonds was raised post-year end.

Its Board declared a final dividend of 72.5 cents per share, taking its total dividend for the year to 134.5 cents, a 7.6% increase on the prior year.

Octodec expects to achieve growth in distributable income and distribution per share of between 0.0% to 4.0% in FY2026.