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Pre-close operational update
OCTODEC INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1956/002868/06)
JSE share code: OCT
JSE alpha code: OCTI
ISIN: ZAE000192258
LEI: 3789I36JI0BKTUSZ8813
(Approved as a REIT by the JSE)
("Octodec" or "the company" or "the group")
PRE-CLOSE OPERATIONAL UPDATE
Octodec management is pleased to present this pre-close operational update for the six-month period ending
28 February 2026, which covers the five months from 1 September 2025 to 31 January 2026, unless otherwise noted.
Macro conditions and trading environment
Lower inflation combined with the lower interest rates has had a positive effect on market and consumer sentiment, which
in turn has supported improved occupancy and rental growth across our diversified portfolio.
Octodec's broad mix of residential, retail, office and industrial assets has generally benefited from these improved
conditions, with residential and retail vacancies remaining stable through the period. These favourable macro shifts,
complemented by disciplined asset management and strategic leasing activity, have underpinned improved collections
supporting robust operational performance across the portfolio.
Letting activity
Within the residential portfolio, vacancies followed the same seasonal trend as in prior years. There was a slight uptick in
vacancies in Hatfield and Johannesburg over the period, however letting at The Fields in February 2026 is exceptionally
strong thanks in part to the introduction of a new software solution automating the leasing process, which has resulted in
improved efficiencies and faster rates of converting enquiries into leases. We expect record high occupancies at The Fields
following the seasonal letting activities in January and February.
Johannesburg unfortunately continues to experience extended periods of electricity and water interruptions, with pressure
remaining on landlords to provide alternative solutions to failing council service delivery and infrastructure, which has
affected the ability to let vacant units. Kempton Park and Pretoria have however showed a reduction in vacancies,
attributed to various marketing campaigns to promote our properties as well as the introduction of special rental offerings
to attract prospective tenants. Although tenant affordability remains a challenge, Octodec leverages the quality and brand
of its residential offering to attract and retain tenants.
In September 2025, Lilian Ngoyi Street reopened to traffic following the gas explosion that caused significant damage to
it in July 2023. Phase 2 of the rehabilitation project to this street is scheduled to be completed by August 2026. Our
property management teams and tenants are reporting improved footfall in the area and stronger trading performance. As
a result of this, retail letting in the area surrounding Lilian Ngoyi has improved and much interest is being shown by
potential tenants for the remaining vacant spaces. We anticipate that the performance of our Johannesburg CBD retail
shop portfolio will continue to improve as foot traffic patterns normalise following the completion of phase 1 of the street
repair.
As noted at our full year results, the City of Tshwane Metropolitan Municipality ("CoT"), which occupied 12,086m2 at
Capitol Towers North, vacated in October 2025. Various opportunities to relet or repurpose this office building are being
explored. The recently piloted Yethu City residential development, which is a mixed-use inner city concept focuses on quality,
affordable rental housing complemented by ground-floor retail and lifestyle amenities, being one of the primary options under
active consideration.
Regarding government leases, we have received six 12-month renewal addenda to Department of Public Works leases
that have expired. The Department of Public Works continues to occupy the other properties with leases that have expired
on month-to-month leases.
In February 2026, a private educational institution occupying 2,800m2 was placed at 228 Pretorius Street, which was
recently vacated by a large non-performing tenant.
The increased vacancies within retail street shops are largely attributed to a national retailer vacating its premises at Silver
Place (2,612m2). Self-storage options are being explored for a portion of this space.
A total of 2,200m2 was let to Style Central at Kempton Place; however, a further 2,538m2 was added to retail street shop
vacancies following the reclassification of the former Standard Bank banking hall at Standard Bank Chambers from
offices to retail.
The retail shopping centre portfolio, comprising convenience and neighbourhood-type properties located in high-demand
areas, was virtually fully let, with vacancies of 0.2% at the end of January 2026 – a small decrease from the 0.5% reported
on 31 August 2025. Killarney Mall, which is held for sale, recorded vacancies of 17.8% at the end of January 2026, in
line with the vacancies reported at 31 August 2025.
At Killarney Mall, a new Regus brand shared offices concept comprising 654m2 was launched towards the end of
January 2026, and we are confident that this will contribute to attracting further footfall to the centre.
Our industrial portfolio, which consists of smaller warehouses and light industrial units, remains in demand. As previously
reported, a tenant, that occupied 6,873m2 at the Talkar property situated in the Hermanstad industrial area in Pretoria
vacated at the end of August 2025. We continue to actively market this property for reletting and or disposal.
Collections
Year-to-date collections in the residential and commercial sectors, as a percentage of total billings, averaged 95.2%
(January 2025: 96.1%) and 97.0% (January 2025: 95.5%), respectively. Residential collections remain in line with the prior
period, whilst commercial collections reflected an improvement, despite one large tenant being under business rescue.
Financial update
During the period, we issued an unsecured corporate bond of R200 million at improved margins (15bps) for a tenor of
three years. In the current year, facilities amounting to R854 million will be maturing, and improved commercial terms
have already been agreed to refinance these accordingly.
Borrowings were reduced following the disposal of nine non-core properties during the five months and accordingly
totalled R4.2 billion at the end of January 2026 compared to R4.3 billion on 31 August 2025. Available unutilised facilities,
excluding cash, improved to R1.0 billion, an increase from R675 million as at 31 August 2025. Octodec's loan-to-value
("LTV") will remain below 40% in the near term, improving from 31 August 2025, and it is the company's strategic
objective to reduce this to 35% in the long term.
Year-to-date, two swaps amounting to a combined R250 million were extended for two years at an average fixed rate of
7.05%. The hedged position on 31 January 2026 was 69.9% (31 August 2025: 71.9%) and considering the interest rate
cycle, Octodec will maintain its hedging position to between 70% and 80%.
The weighted average cost of debt improved to 8.8% at the end of January 2026, compared to 9.1% on 31 August 2025,
due to improved margins on the refinanced facilities and the reduction in the interest rate.
Acquisitions/developments and disposals
In the financial year to date we have successfully disposed of nine properties for approximately R81.2 million, a 3.7%
premium to book value. These disposals are all considered yield enhancing, with the average carrying value of these
properties being R8.3 million. The proceeds have been allocated towards debt and deployment towards the Gezina City
redevelopment project.
Management is resolute in disposing of non-core properties with the objective of increasing the average value of properties
in the portfolio to R100 million or more.
Capital deployment
For the period to 31 January 2026, R39.5 million was spent on projects, which includes the following:
- Gezina City – R14.3 million, relating mainly to the large ongoing redevelopment, which includes a solar installation
project
- Killarney Mall – R3.3 million, relating to the capital requirements of introducing a shared offices concept under the
Regus brand.
- Rentmeester Office Park – R3.5 million relating to an office upgrade as per the lease agreement with the tenant.
- The Fields – R3.7 million, which relates to the furnishing of the units in one residential block to facilitate the required
demands from students and accordingly improve letting of our residential units.
- Fire and compliance solutions of approximately R5.0 million at several buildings, which includes backup solutions.
Guidance affirmation
The guidance provided at the August 2025 year-end results presentation pertaining to the growth in the distribution per
share of between 0% and 4.0% for the full year ending 31 August 2026 remains unchanged, and any updates thereto will
be communicated to the market.
The above guidance is based on the following key assumptions:
- Forecast property income is based on contractual rental escalations and market-related renewals;
- Adequate allowance has been made for known vacancies and rent reversions;
- No major corporate and tenant failures will occur;
- Property expenses are based on management's best estimate of the required costs to manage the property portfolio
responsibly;
- A stable interest rate environment; and
- No unforeseen events will occur.
This outlook for the year ending 31 August 2026 has not been reviewed or reported on by the group's auditors.
23 February 2026
Sponsor Debt Sponsor
Java Capital Nedbank Corporate and Investment Banking,
a division of Nedbank Limited
Investor relations advisor
Hudson Sandler (Pty) Ltd
Date: 23-02-2026 12:30:00
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