Emira Property Fund saw vacancy rates for its South African portfolio surge during the six months to 31 December 2020.
The fund, which released its six months results recently, reported a 5.9% (excluding residential) increase in vacancies, from 4.1% in June 2020.
Emira attributes this to tenants consolidating their space requirements, and tenant failures to make rental payments.
“Overall, the outlook remains challenging and uncertain with further increases in vacancies. We are focusing on maintaining occupancy levels by retaining existing tenants,” says Geoff Jennett, Emira CEO.
Looking at vacancy rates of 2.5% across different sectors, the urban retail recorded 3.4% and industrial (3.9%).
The office sector saw a jump to 14.9% during the reporting period from 6.9% in June 2020, due to the impact of Covid-19 on tenants occupying various buildings, says Jennett.
Some of the reasons for the rise in empty buildings, are the strong work-from-home mindset, and the general slower uptake of office space.
One of its largest offices, Menlyn Corporate Park in Pretoria, was the most affected, as the tenant, Santam, which occupied 4,657m2 consolidated into alternative offices.
“Given a challenging environment, Emira will need to adjust its leasing strategies and, where required, implement tenant incentives to suit the changing market conditions.”
The fund provided a further R17.8m in permanent rental remissions during the period to support 363 high-risk tenants including gyms, restaurants and entertainment venues. These tenants experienced trading restrictions during hard lockdown.
Jennett says their sole directly held residential property, The Bolton rental apartments in Rosebank, Johannesburg recorded a vacancy rate of 2.5%.
The building with 282 units, is 97.5% let, with only seven vacant apartments as at 31 December 2020.
Emira’s diversified fund comprises 78 directly held properties valued at R9.9bn in South Africa. Of these properties, one is a residential property, 20 are offices, 19 are retail and 38 are industrial.
Emira also has equity investments in 10 grocery-anchored convenience shopping centres in the USA.
Edited by Gudrun Kaiser