Octodec and Premium actively refurbishing 76 CBD properties

Posted On Wednesday, 31 July 2013 12:17 Published by Commercial Property News
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JSE-listed sister companies Octodec Investments and Premium Properties have 76 property refurbishment projects on the go in Gauteng’s central business districts (CBDs), amid continued improvements in the province’s inner cities.

Jeffrey WapnickThe value of the group’s on-the-go projects is about R600m.

If planned projects are included, this number rises to more than R1bn.

Managed by City Property, Octodec and Premium are unique players in the listed real estate space given their significant exposure to the residential sector, which is more management intensive than other sectors. The group’s conversion of a number of formerly dilapidated office buildings into higher-end residential units now sees it managing more than 11,000 residential units, primarily in Pretoria’s and Johannesburg’s CBDs.

Octodec and Premium MD Jeffrey Wapnick said on Monday that of City Property’s 8,000 residential units in Pretoria, only about 50 were vacant, indicating the strong demand for quality accommodation in Gauteng’s inner cities.

While the inner city office property market was less buoyant, the retail sector was robust, with strong and increasing interest from national tenants over the past few years. "Prime retail" properties in the CBDs had zero vacancies, Mr Wapnick said.

Premium’s investment portfolio, which has a 29% exposure to the residential sector, was valued at R4.7bn at the end of February, while Octodec’s was worth R3.7bn. Octodec has a much smaller residential component.

Mr Wapnick said Pretoria’s and Johannesburg’s CBDs were in their most positive states in many years "and it’s getting better all the time". City Property was "very bullish" about the outlook for inner city real estate, he said.

Octodec and Premium financial director Anthony Stein said with new entrants, particularly in the Johannesburg market, and a scramble for inner city properties in recent years, "prices have moved significantly", with relatively few acquisition opportunities remaining.

But the group held a number of properties in Johannesburg which it could redevelop or upgrade, and new development opportunities in Pretoria, where City Property had abundant land holdings.

A few planned office-to-residential conversions would push Premium’s residential exposure above 30%. Referring to high-quality city accommodation, Mr Stein said: "We haven’t tested the demand yet".

Octodec and Premium may merge after each converts to a real estate investment trust. Premium reported distribution growth of 9% to 126.2c per linked unit for the year to February, while Octodec reported a 10.5% rise in distributions to 78.7c for the six months ended February.

 

Last modified on Wednesday, 31 July 2013 13:13

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