EMIRA PROPERTY FUND LIMITED - Forecast on level of future distributions per share

Forecast on level of future distributions per share

EMIRA PROPERTY FUND LIMITED  
(Incorporated in the Republic of South Africa) 
Registration number 2014/130842/06 
Share code: EMI  ISIN: ZAE000203063 
(“Emira” or “the Fund”) 
(Approved as a REIT by the JSE) 
 
FORECAST ON LEVEL OF FUTURE DISTRIBUTIONS PER SHARE 

Shareholders are advised that the Fund continues to expect similar growth in distributions per share 
for the financial year ending 30 June 2016 (“FY16”), consistent with previously provided guidance. In 
this regard, shareholders are specifically referred to the Prospects paragraph to Emira’s interim 
result announcement for the six months ended 31 December 2015, released on the Stock Exchange 
News Service (“SENS”) on 17 February 2016. Emira’s financial results for FY16 are expected to be 
released on SENS on 17 August 2016. 

Looking forward and taking into account current and expected future market conditions, vacancy 
profiles and rental reversion expectations, the Fund has completed a revised budget for the financial 
year ending 30 June 2017 (“FY17”), and is forecasting a negative growth in distributions per share of 
approximately 2% when compared to the expected distributions for FY16. The forecast decline 
reflects the cumulative impact of numerous simultaneously occurring factors, including: 

    1. Vacancies: During the last 4 to 6 months the Fund has been negatively impacted by 
       additional vacancies in its office portfolio that is anticipated to total approximately 30,000m² 
       additional average vacancy in FY17. This has been primarily due to an increasingly weaker 
       economy where a larger number of office tenants are vacating space and necessary periods 
       are being forecast to re-let the space;  
    2. Rent reversions: The Fund is anticipating greater than previously expected negative rental 
       reversions on certain larger expiring leases; 
    3. Property  sales: The Fund was anticipating the sale of certain underperforming properties, 
       however, due to the generally depressed economic environment and the consequent lack of 
       activity in the property market, these sales have not yet materialised; and   
    4. Financing costs: Continuing increases in interest costs are being incurred on the unhedged 
       (approximately 15%) portion of the Fund’s debt. 

Economic conditions have deteriorated throughout the last 6 months, with the decline accelerating 
over recent months, and materially increasing pressure on the Fund’s tenants. The Fund is now 
progressively experiencing the broader decline in economic conditions impacting the property 
market, particularly the office market which is also experiencing significant additional supply in the 
Fund’s core market of Gauteng, including Pretoria and the adjoining nodes. Notwithstanding this, 
management is of the view that the simultaneous occurrences of the above factors is unlikely to re-
occur to this sort of extent in the foreseeable future. 

In response to these increasingly more challenging conditions, management is very focused on filling 
the Fund’s vacancies through the increased use of tenant incentive and marketing programs, as well 
as re-evaluating all alternatives to improve the quality and let-ability of the portfolio. The Fund, with 
its low gearing and conservatively hedged position, continues to re-invest into its predominantly 
South African, diversified portfolio of 146 properties split between office, retail and industrial, and 
continually re-evaluates the mix and quality of its assets. 

The Fund’s Board and management are forecasting that these more adverse conditions will continue 
into FY17 and will thereafter stabilise. On the basis of this forecast, the Fund’s Board and 
management expect real growth in distributions per share in FY18.  

This forecast has not been reviewed or reported on by the Fund’s external auditors. 

 

Bryanston 
20 June 2016 
 
Sponsor 
RAND MERCHANT BANK (A division of FirstRand Bank Limited) 
 

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