Octodec Investments Limited · JSE:OCT
Octodec Investments — H1 2025 Earnings Presentation
40 slides from Octodec Investments's earnings presentation, May 2025
Slide 1: Unaudited interim results for the six months ended 28 February 2025
Unaudited interim results for the six months ended 28 February 2025 Octodec Investments Limited C Unaudited interim results for the six months ended 28 February 2025
Slide 2: Contents and HY2025 performance highlights
Contents HY2025 performance Commentary2 Introduction 2 highlights Distributable income 2 Dividend 3 Revenue (R’million) Profit for the period (R’million) Performance overview 3 R1 056.2 R227.8 Sector review 5 (HY2024: R1 004.4) (HY2024: R99.0) Collections6 Receivables and expected credit loss 6 Dist
Slide 3: Rental income by sector and geographical analysis
Rental income by sector Geographical analysis of rental income Hatfield (6.6%) (2024: 6.4%) Johannesburg and Residential (33.9%) surrounding areas (12.3%) (2024: 33.9%) (2024: 12.1%) Retail – street shops (22.9%) Johannesburg CBD (17.4%) (2024: 23.7%) (2024: 18.0%) Retail – Silverton and shopping ce
Slide 4: Commentary: Introduction
Commentary Introduction Octodec Investments Limited (Octodec or the company), its subsidiaries and associated company (the group) is a real estate investment trust (REIT) listed on the JSE Limited (JSE) and A2X, with a diversified portfolio of 226 residential, retail, office and industrial propertie
Slide 5: Dividend and performance overview
Dividend Unaudited Unaudited 28 February 29 February 2025 2024 Cents per share Cents per share Distributable income per share 83.30 82.47 Distribution per share 62.00 60.00 Growth in distribution HY2025 3.3% 0.0% The board has considered the solvency and liquidity of the group and its capital requir
Slide 6: Property expenditure and expenses
Expenditure Property expenses spread (R’m) Property expenditure, unfortunately, continued to increase above the prevailing inflation 200 rates at 7.1% to R582.6 million (HY2024: R544.1 million), with increases in administered costs proving difficult to control. Utility costs increased by 11.8% when
Slide 7: Sector review
Sector review At a group level, rental income excluding recoveries and straight-lining increased by 4.6% and, on a like-for-like basis, excluding the impact of the disposal of properties, rental income increased by 5.0%. Residential sector Octodec’s well-located, secure and well-maintained residenti
Slide 8: Collections and receivables and expected credit loss
Offices Octodec’s office portfolio performance showed some improvement with rental income growing by 9.8% to R150.7 million (HY2024: R137.2 million). The increase in rental income is distorted by a R5.0 million net lease adjustment processed in the comparative period relating to certain government l
Slide 9: Investment property
The increase in the amount owing from commercial tenants is largely attributable to two large tenants who are under business rescue, a tenant operating in the education sector in the Johannesburg CBD and some tenants exposed to Lilian Ngoyi Street. Octodec’s ECL policy was consistently applied from
Slide 10: Residential, commitments, acquisitions and disposals
Residential Throughout its history, Octodec has acquired and redeveloped numerous transformative projects, pioneering the conversion of ageing and underused office buildings into quality affordable residential accommodation. In 2024, we proudly undertook the Yethu City redevelopment, which successfu
Slide 11: Investment property valuations; borrowings and cash flow management
Investment property valuations The property portfolio consisting of 226 buildings, including the joint venture, was internally valued at R11.3 billion in February 2025 (FY2024: R11.2 billion). In line with the group’s accounting policy, the entire portfolio is valued internally every six months, and
Slide 12: Loan and derivatives expiry profile; covenants
Loan expiry profile (R’million and %) Interest rate derivatives expiry profile (R’million and %) 1 100 1 243 1 102 900 1 013 500 539 250 11.4% 12.3% 23.0% 28.3% 25.0% 11.1% 40.0% 48.9% 2025 2026 2027 2028 2029 2025 2026 2027 Total R4 397 Total R2 250 Octodec’s weighted average loan tenor increased t
Slide 13: Vacancies
Vacancies Vacancies as a percentage of gross lettable area (GLA), including those properties held for redevelopment, improved from 21.1% at 31 August 2024 to 20.1% at 28 February 2025. Core vacancies, which exclude those properties held for redevelopment, improved from 14.9% at 31 August 2024 to 13.
Slide 14: Vacancies by location; mothballed space
Vacancies by location Total Properties % GLA held for Core of total vacancies redevelopment vacancies GLA m 2 vacancies % % % 28 February 2025 Tshwane CBD 494 263 32.5 19.9 (6.9) 13.0 Tshwane and surrounding areas 494 324 13.2 8.1 0.0 8.1 Johannesburg CBD 378 806 48.0 38.3 (16.2) 22.1 Johannesburg a
Slide 15: Lease expiry profile
Lease expiry profile The leases concluded with a large percentage of our tenants are typically of a short-term nature, where lease periods are generally for a period of 12 months. This has been a consistent characteristic of our portfolio since inception and forms part of our strategy. This is espec
Slide 16: Lease expiry profile at 31 August 2024
By rental income (%) By GLA m2 (%) August August August August August August 2029 and August August August August 2029 and 31 August 2024 2025 2026 2027 2028 beyond 2025 2026 2027 2028 beyond Vacant Total Sector Residential 100.0 – – – – 90.8 – – – – 9.2 100.0 Commercial Retail Shops 44.9 21.5 16.8
Slide 17: Dividend declaration
Dividend declaration The board of Octodec has declared a cash dividend of 62.00000 cents per share for the six months ended 28 February 2025, payable out of the company’s distributable income. The salient dates relating to the interim dividend are as follows: 2025 Last day to trade cum dividend Tues
Slide 18: Outlook and prospects
Outlook and prospects The formation of the GNU supported an increase in business confidence and optimism, with expectations of increased economic activity to follow. The start of an interest rate reduction cycle in September 2024 undoubtedly stimulated the property market, with more potential buyers
Slide 19: Consolidated statement of financial position
Consolidated statement of financial position Unaudited Unaudited Audited 28 February 2025 29 February 2024 31 August 2024 R’000 R’000 R’000 ASSETS Non-current assets 10 646 706 11 083 985 10 565 679 Investment property 10 472 988 10 889 594 10 396 215 Straight-line rental income accrual 72 483 89 94
Slide 20: Consolidated statement of profit and loss and other comprehensive income
Consolidated statement of profit and loss and other comprehensive income Unaudited Unaudited Audited 28 February 2025 29 February 2024 31 August 2024 R’000 R’000 R’000 Revenue 1 053 001 1 005 862 2 076 143 Rental income on a contractual basis 1 056 205 1 004 370 2 076 366 Straight-line rental income
Slide 21: Consolidated statement of changes in equity
Consolidated statement of changes in equity Non-distributable Stated capital reserve Retained income Total R’000 R’000 R’000 R’000 Balance at 31 August 2023 (audited) 4 210 134 1 493 585 855 907 6 559 626 Total comprehensive income for the period – – 98 978 98 978 Dividends paid – – (199 648) (199 6
Slide 22: Consolidated statement of cash flows
Consolidated statement of cash flows Unaudited Unaudited Audited 28 February 2025 29 February 2024 31 August 2024 R’000 R’000 R’000 Cash flows from operations Cash generated from operating activities 475 619 407 271 835 410 Interest received 7 359 9 357 16 734 Finance costs paid (212 762) (199 309)
Slide 23: Reconciliation of profit to headline earnings
Reconciliation of profit and loss and other comprehensive income to headline earnings Unaudited Unaudited Audited 28 February 2025 29 February 2024 31 August 2024 R’000 R’000 R’000 Total comprehensive income attributable to shareholders 227 835 98 978 215 979 Headline earnings adjustments Fair value
Slide 24: Reconciliation of income to distributable income
Reconciliation of income to distributable income Unaudited Unaudited Audited 28 February 2025 29 February 2024 31 August 2024 R’000 R’000 R’000 Total comprehensive income attributable to shareholders 227 835 98 978 215 979 Fair value changes – Investment property (26 504) 96 925 161 526 – Investment
Slide 25: Notes to the unaudited condensed consolidated interim financial statements
Notes to the unaudited condensed consolidated interim financial statements Basis of preparation The unaudited condensed consolidated interim financial statements are prepared in accordance with the JSE Listings Requirements and the requirements of the Companies Act, No 71 of 2008. The unaudited cond
Slide 26: Financial instruments
Fair value hierarchy The fair value hierarchy reflects the significance of the inputs used in making fair value measurements. The level within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value me
Slide 27: Classification of financial assets and liabilities
Classification of financial assets and liabilities Fair value At through profit amortised Outside scope or loss cost of IFRS 9 Total R’000 R’000 R’000 R’000 ASSETS 28 February 2025 (unaudited) Loan to joint venture – 17 079 – 17 079 Accounts receivable and prepayments – 128 736 50 505 179 241 Cash a
Slide 28: Investment property
Investment property Investment properties are valued biannually by the internal finance team at City Property, and the portfolio valuation is reviewed and approved by the board. In terms of the JSE Listings Requirements, all the properties are valued by external independent valuers at least once ove
Slide 29: Unobservable inputs at 28 February 2025
The following unobservable inputs were used by the group at 28 February 2025: 28 February 2025 (unaudited) Weighted Weighted Weighted average average long- average Number of Fair value capitalisation range vacancy expense ratio properties R’000 rate % factor % % Capitalisation rate 8.50% – 8.75% 2 7
Slide 30: Unobservable inputs at 29 February 2024
29 February 2024 (unaudited) Weighted Weighted Weighted average average long- average Number of Fair value capitalisation range vacancy expense ratio properties R’000 rate % factor % % Capitalisation rate 8.50% – 8.75% 2 664 900 8.6 1.6 28.3 9.00% – 10.00% 76 6 835 700 9.6 7.0 32.2 10.25% – 11.50% 1
Slide 31: Unobservable inputs at 31 August 2024
31 August 2024 (audited) Weighted Weighted Weighted average average long- average Number of Fair value capitalisation range vacancy expense ratio properties R’000 rate % factor % % Capitalisation rate 8.50% – 8.75% 2 704 200 8.6 1.8 26.8 9.00% – 10.00% 75 6 903 200 9.6 6.6 32.2 10.25% – 11.50% 124 2
Slide 32: Sensitivity to changes in valuation inputs
Sensitivity to changes in valuation inputs The significant unobservable inputs used in the fair value measurement of the group’s investment properties are the capitalisation rate, the expense ratio, and the long-range vacancy factor. Significant increases/decreases in any of the above inputs in isol
Slide 33: Cash generated from operations
Cash generated from operations 28 February 2025 29 February 2024 31 August 2024 R’000 R’000 R’000 Profit before taxation 237 732 108 885 211 349 Adjusted for: Straight-line rental income accrual 3 203 (1 492) (295) Fair value changes to: – investment property (26 504) 96 925 161 526 – derivative fin
Slide 34: Related-party transactions and events after the reporting date
Related-party transactions Octodec and City Property are related parties in that Jeffrey Wapnick and Sharon Wapnick are directors of Octodec and City Property, and members of the Wapnick family are shareholders of both companies. Sharon Wapnick is also a partner of Tugendhaft Wapnick Banchetti and P
Slide 35: Rental income by sector
Rental income by sector Unaudited Unaudited Audited 28 February 29 February 31 August 2025 2024 2024 R’000 % R’000 % R’000 % Residential 266 255 34.3 253 861 34.2 529 503 34.9 Retail – street shops 179 744 23.2 178 666 24.1 356 926 23.5 Retail – shopping centres 90 456 11.7 85 151 11.5 174 224 11.5
Slide 36: SA REIT ratios
SA REIT ratios 28 February 2025 29 February 2024 31 August 2024 R’000 R’000 R’000 SA REIT FUNDS FROM OPERATIONS (SA REIT FFO) PER SHARE Profit or loss per IFRS Statement of Comprehensive Income (SOCI) attributable to the parent 227 835 98 978 215 979 Adjusted for: Accounting/specific adjustments: (8
Slide 37: SA REIT cost-to-income ratios
28 February 2025 29 February 2024 31 August 2024 R’000 R’000 R’000 SA REIT cost-to-income ratio Expenses Operating expenses per IFRS income statement (includes municipal expenses) 556 758 524 779 1 104 994 Administrative expenses per IFRS income statement 55 445 52 581 111 339 Other expenses, if dir
Slide 38: Cost of debt and SA REIT loan-to-value
28 February 2025 29 February 2024 31 August 2024 R’000 R’000 R’000 Cost of debt Variable interest-rate borrowings Floating reference rate plus weighted average margin (%) 9.5 10.4 10.3 Pre-adjusted weighted average cost of debt (%) 9.5 10.4 10.3 Adjustments: Impact of interest rate derivatives (%) (
Slide 39: Company information
Company information Octodec Investments Limited Sponsors Investor relations Incorporated in the Republic of South Africa Equity market Instinctif Partners Registration number: 1956/002868/06 Java Capital Contact person: Louis Fortuin JSE share code: OCT Contact person: Shivani Bhikha 2nd Floor, Oxfo
Slide 40: Head office and Our Vision
Head office CPA House, 101 Du Toit Street, Tshwane 0002 Our Vision To innovate in the property market and unlock long-term capital appreciation and income flows, through investment in a well-diversified multisector property portfolio. We remain cognisant of our role as a responsible corporate citize