Vacancies drag down SA Corporate Real Estate Fund

SA’s economic conditions dragged down SA Corporate Real Estate Fund’s performance for its financial year to December 2019, reporting a rise in vacancies.

Amid a difficult period for most landlords in the country, SA Corporate, whose largest shareholders include the Government Employees Pension Fund (GEPF), Prudential, Stanlib and Allan Gray, struggled to deliver dividend growth as overall vacancies doubled to 4.2% in its year to end-December 2019.

Its office vacancy increased to 15.96%, higher than the rest of its portfolio.

It has had to sign negative rental reversions in order to keep certain tenants but its dividends have come under pressure. It declared total distribution for the year fell 9.9% to 38.04c.

The diversified real estate investment trust also expects distribution for its 2020 year to fall by between 3% and 6%.

SA Corporate’s portfolio of 200 properties is valued at R17.4bn, and its 50% joint venture in three Zambian properties is valued at R930.6m.

The group’s portfolio covers industrial, retail, commercial and residential buildings, mostly in major metropolitan areas of SA.

Last year, SA Corporate disclosed to the market that offers from competitors, Dipula Income Fund and Emira Property Fund were not in the best interests of the company.

Looking ahead, CEO Rory Mackey said SA Corporate was committed to generating defensive income in a continuously fragile economy.