Property Flash


November 3 2023

Octodec Investments, the JSE-listed diversified landlord which tends to invest mostly in the inner cities of Johannesburg and Tshwane, released financial results for the year to end-August 2023, in which it grew its dividend per share 3.8% to 135 cents from 130 cents. This is while numerous other listed property funds have seen their dividends shrink. The group’s revenue climbed 3.3% to R2bn and net property income 2.5% to R940.3m in the reporting period.

Octodec’s residential properties, which generated 34% of the company’s total rental income, achieved 10.3% like-for-like growth in rental income despite the depressing rising cost of living in South Africa. High inflation, interest rates and energy costs are making life harder in South Africa.

South Africans contend with high inflation, greater energy and fuel costs, and elevated interest rates.

According to Wapnick, demand is exceeding supply in the areas it operates where monthly rentals range from R3,500 to R8,000. The average net monthly salary of its tenant applicants is R21,150.

The group which is worth about R2.4bn, might become a takeover target in the near future. They are led by MD Jeffrey Wapnick. Wapnick runs City Property, a real estate management group. Octodec has been listed for decades and might be an attractive buy for funds who want exposure to the group’s inner city offices and complementary retail and residential properties. The group also owns a number of malls including the underperforming Killarney Mall, located in Johannesburg.

Funds might want exposure to City Property because it is such a well-run real estate manager. The group is exceptionally good at collecting rentals. Octodec’s portfolio includes 238 residential, retail, office and industrial properties valued at R11.2bn

But who would buy Octodec? Potentially a private group would consider buying out the fund or maybe a listed fund such as Heriot Reit.

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