Safari Investments’s core retail property assets “had performed well in the past year to March 31 and were dominant in their regions,” Safari CEO Dirk Engelbrecht said yesterday.
Safari, which Heriot Reit this month offered to acquire, declared a final cash distribution of 32 cents per share for the year to end-March, bringing the payout for the year to 67 cents, which was 35.7 percent higher than the previous year.
The distribution per share represented 100 percent of distributable income versus 91 percent in 2021.
Heriot, which with two other parties already owns some 33.1 percent of Safari, has offered to acquire all Safari shares at R5.60 per Safari share. However, Safari’s share price was untraded at R5.70 yesterday, having risen sharply from R4.50 over 12 months.
Engelbrecht said in a telephone interview that it wasn’t a hostile takeover, as the parties had a good relationship, an offer was inevitable given Heriot’s plans to increase its stake over 35 percent and given the two firms had jointly sought Competition Commission approval for a merger earlier in the year.
Safari has nine key assets including Thornhill Shopping Centre, Mnandi Shopping Centre, Soweto Day Hospital and Attlyn Shopping Centre. The group said the defensive and dominant nature of the assets had resulted in a reduced vacancy factor of 1.9 percent compared with 2.4 percent in 2021.
Safari’s operating profit, before investment revenue, fair value adjustments and finance costs increased to R245.14m from R215.23m in the prior year.
Property revenue increased by 14 percent to R365.48m.
The monthly weighted average gross rental per square metre of the portfolio improved to R171 per square metre compared to R149 in 2021.
Property expenses as a percentage of property revenue improved to 26 percent compared to 27 percent in the prior year. Valuation of the portfolio increased 1.15 percent to R3.54 billion.
The SA-Reit net asset value per share increased to 855 cents per share, from 819 cents. The SA-Reit loan-to-value decreased to 37 percent from 39 percent.
Heriot, however, said earlier this month: “The stand-alone prospects for Safari are constrained, given that investors generally prefer to invest in Reits that have larger market capitalisations and offer greater liquidity to shareholders than Safari.”
Engelbrecht said the liquidity of Safari’s shares, given its small market capitalisation had been an issue in the past and this might improve with the Heriot acquisition.
Heriot, which is listed on the Alternative Exchange of the JSE, is invested in retail and industrial properties in areas with high growth potential, with its portfolio worth R4.63bn. Its retail centres include Shoprite Fishhoek, Siyabuswa Mall, Birch Acres Mall and Burgersfort Mall.
Heriot attributed its 15 percent growth in distributable earnings for the six months to December 31 to an additional investment in Safari Investments and the recovery of an insurance claim of R5m for the loss of rental income incurred during the Covid-19 hard lockdown period in 2020.
edward.west@inl.co.za
BUSINESS REPORT