Octodec HY distributable income per share up 1%

Octodec, a property company operating in the Johannesburg and Pretoria CBDs, is facing challenges due to disruptions in service deliveries in the area. Riaan Erasmus, Deputy CEO & Financial Director of Octodec, highlighted the difficulties they are experiencing, particularly in Johannesburg, where disruptions to water and electricity supply are impacting their services. The ongoing repairs on Lillian Goy street are exacerbating the issue, hindering the company's ability to drive value out of their portfolio. Despite having backup systems in place, the limited capacity adds pressure on their operations. In terms of financial performance, Octodec reported a 5.2% increase in revenue driven by growth in shopping centers and office spaces. Erasmus emphasized the importance of controlling bad debt provisions and utilities costs, which impose sustainability issues on tenants. The company has managed to keep finance costs well-controlled, benefited from matured interest rate swaps, and improved margins on debt refinancing. The office sector, one of Octodec's better performers, is facing oversupply concerns. The company focuses on smaller office spaces between 100 and 300 square meters, leading to vacant spaces outside the core portfolio areas. Finding innovative ways to activate these spaces is crucial to mitigating the oversupply challenge. Looking ahead, Erasmus acknowledged positive signs in the economy and their portfolio, with an uptick in letting activities across residential, retail, office, and industrial sectors. However, rising utility costs pose a challenge for the company and industry at large, impacting tenant sustainability. Despite the challenges, Octodec remains optimistic about potential growth, with a projected increase in distributable profit per share and dividends. For the current financial year, Octodec increased its distributable profit per share by 1% and raised dividends by 3.3% to 62 cents per share. The company revised its growth outlook to 2% to 4%, slightly lower than the previous forecast, reflecting the cautious optimism amidst the prevailing economic conditions. In a conversation with CNBC Africa, Riaan Erasmus expressed hope for improvement in the company's performance despite the challenges, signaling resilience and adaptability in navigating the evolving property landscape.