Emira Property Fund is mulling the injection of R2.5-billion in capital expenditure (capex) for projects in planning across its portfolio, after several successful redevelopment, expansion and improvement projects, as well as acquisitions and disposals, boosted the JSE-listed real estate investment trust’s (Reit’s) portfolio value.

Emira’s local investment property value across 146 properties increased 4.2% to R13-billion in the six months to December 31, with some R515.1-million in capex spread across 13 property redevelopment and extension projects that are currently under way.

The modernisation, extension and redevelop-ment programme includes the R69.4-million upgrade and refurbishment of the 19 342 m2 Kramerville Corner, in Marlboro, which will be completed by March.

Another significant project is the R795-million three-phase redevelopment of the Knights-bridge Manor office park, in Bryanston, from a 10 000 m2 B-grade office park to a 29 352 m2 P-grade, seven-building, 4-Star Green Star SA-rated office park. The R368-million 13 500 m2 first phase, on which work started in November, is scheduled for completion in May 2017.

The rest of the project will be developed in line with tenant and market demand, and expectations are that phases two and three will be completed in April 2019, says CEO Geoff Jennett.

The group is also extending its 60%-owned Ben Fleur centre, in eMalahleni, at a cost of R19.9-million, and revamping its 9 Long street, Wonderpark and Bradenham Hall assets, in Cape Town, Pretoria and Rivonia respectively, at an aggregate cost of R28.7-million. These projects are set to be completed this year.

“The number of projects under way reflects the fund’s strategy to continually upgrade the portfolio and extract value from existing bulk,” Jennett says, pointing out that the yield of the top six projects would be, on completion, above 7.8%, while the yield on all 13 projects would be 7.7%.

Speaking at Emira’s interim results presen-tation, in Sandton, he notes that, if the market could absorb it, Emira would gradually realise about R2.5-billion in projects that are in planning.

The potential projects being considered include a R730-million residential/office development at the 12 Baker street and 2 Sturdee road, Rosebank, properties; the R550-million development of Harbour Place, in Cape Town; the development of Southern Sentrum, in Bloemfontein; Podium Phase 2, in Menlyn; Quagga Centre Phase 1, in Pretoria; and Ben Fleur Phase 3, in eMalahleni.

During the six months to December, Emira entered into agreements to dispose of properties valued at R421-million and acquired properties to the value of R240-million.

It bought a 50% undivided share in the Mitchells Plain shopping centre, in Cape Town, for R75.3-million, at an initial yield of 9.3%, in addition to a 50% undivided share in Summit Place, Menlyn, for R403-million at an average yield of 8.14%.

The first two completed buildings, Summit Place 1 and Summit Place 2, were transferred to Emira in December at a cost of R86.4-million.

The remaining three buildings, which include both office and retail space, will be developed by Emira and completed by January 2017. By December 31, R110-million had been paid for the land and as development costs for Summit Place 3 and Summit Place 4.

The company is also in negotiations to buy the remaining 40% in the Ben Fleur centre.

Further, Emira is acquiring, for R70-million, the vacant 21 000 m2 1 West property, in Centurion – one of its projects in planning. The company is considering embarking on a R561-million commercial development on the site.

Emira continued its “recycling of capital” and strategic noncore property disposals and reinvesting of the proceeds in strategic acquisitions, developments and upgrades.

The Reit sold two buildings during the first half of the financial year, with the transfer of Brandwag shopping centre and Kosmos flats, in Bloemfontein, concluded in September for R250-million.

One disposal was concluded after the close of the half-year, while the remaining three transfers will be completed within the next three months, after agreements have been entered into for the sale of the noncore offices in Bloemfontein for R171.2-million.

Emira plans to increase its asset base of office, retail and industrial properties to R20-billion within the next two-and-a-half years and cautiously increase its exposure to offshore Reit holdings to about 10% in the next 12 to 18 months.

The group’s international diversification is being undertaken through a 4.9% direct holding in ASX-listed Growthpoint Australia (GOZ), at a value of R942.7-million, which brings Emira’s total current asset value to R14-billion.

Income from Emira’s 27.2-million-unit invest- ment in GOZ has increased by 21.8% as a result of increased distributions and the rand’s depre-ciation against the Australian dollar.

In line with this, the group plans to build skills and capacity to become comfortable enough to pursue direct investments in an offshore jurisdiction at a low risk.

During the first half of the year, Emira delivered an 8.8% increase in distributions per share to 70.34c, owing to the increased income from the GOZ investment, an improved portfolio occupancy, acquisitive growth and contractual escalations on most of its portfolio.

CFO Greg Booyens says the company generated revenue of R883-million in the first half of the year, a 5.4% rise on the prior corresponding period, while the company’s property expenses were well contained, with the gross cost-to-income ratio marginally higher at 35.7%.