SA Corporate Real Estate has guided at least a 5% increase in its distribution for its 2024 financial year to end December 31, 2024, and it has forecast a further increase on that for the 2025 year.
The JSE-listed REIT with retail, industrial, office, and residential properties in South Africa, with a secondary presence in Zambia, said in a pre-close update on Friday. The share price moved up 1.98% to R3.09 in trading on the JSE on Friday, a price that was 34.35% higher than at the same time a year ago.
For the 2024 financial year, the retail portfolio achieved 6.8% revenue growth due to strong contracted rental escalations, improved utility recoveries, and financial gains realised from additional take-up of space in Morning Glen, Hayfields Mall, Umlazi Mega City, and Willow Way Centre.
The top-line growth was dampened by operating expense growth of 9.7% stemming from increased security costs during the national election period and above-inflation municipal expenses of 13.5%. Like-for-like net property income growth for 2024 was predicted at 4.4%.
In the industrial portfolio, where like-for-like net profit income growth of 6.9% was forecast for 2024, the above-inflation growth is largely attributed to strong contracted rental escalations and proactive letting efforts resulting in limited re-tenanting downtime, achieving almost full occupancy in 2024.
In the Afhco (Affordable Housing Company) unit, with its affordable housing portfolio, above-inflation growth was primarily driven by solid residential rental increases, improved utility recoveries, and benefits of solar and borehole installations.
Inner-city vacancies have decreased to 2.7%, reflecting a strong and continued improvement, while suburban vacancies stand at 5%, indicating steady performance.
In the Afhco retail portfolio, vacancies continued to be well managed. Deals in the second half of the year led to a decrease in vacancies. The notable tenants were Hungry Lion of 270 square metres and Jam Clothing of 282 square metres at Jozi House.
A 4.2% rental escalation was achieved in the residential units of Afhco, effective annually in October, which “highlights the ability to balance sustainable revenue growth with tenant affordability,” the group said.
The increase aligned with market trends in the affordable housing sector, ensuring competitive pricing while maintaining good tenant retention, the group said.
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