Our opinion on the current state of EMI

Emira Property (EMI) is a real estate investment trust (REIT) which has substantial exposure to the South African economy through its office properties. It owns the prestigious Knightsbridge office park in Bryanston. It has a new CEO in the form of Geoff Jennett and the business has been improving consistently since he took over. It has about R760m of overseas exposure mostly to outdoor shopping malls in America and a further R918m in Growthpoint Australia - but most of its exposure is still here in South Africa. It owns 35% of Transcend, a South African residential fund. It has reduced its office exposure from 35,7% to 25%. It is dependent on improvements in the South African economy. It recently reduced its holding of B- and C-grade offices by selling twenty-five of them to Shankly Property Investments (controlled by Sandile Zungu) for R1,8bn. This has freed up cash which has been invested in retail shopping centres in America. On 23rd April 2021 the company announced that it had received a mandatory offer from Maitlantic (Pty) Ltd, and I Group Consolidated Holdings for the purchase of the balance of its listed shares as a result of its shareholding going above 35%. The offer is at 915c per share in cash which is well below the company's net asset value (NAV). In its results for the 9 months to 31st March 2023 the company reported that it had changed its financial year-end so that its results were not comparable. The company reported portfolio revenue down 11,2% and headline earnings per share (HEPS) down 38,45%. The company said, "Net asset value per share increased by 4.16% to 1 696.4 cents compared to 1 628.6 cents for the comparative period; • Distributable earnings, whilst not comparable, decreased by 17.20% to R558.0 million compared to R673.9 million for the comparative period". In a pre-close update on 28th September 2023 the company reported vacancies at 4,3% and collections at 95,2%. The company said, "Office vacancies at the end of the period increased marginally to 12,7% (March 2023: 12,5%). The WALE has reduced slightly to 2,6 years and 73,4% (by gross rental) of maturing leases in the period were retained. Total weighted average reversions for the period have improved to -7,5% (March 2023: -14,8%)". Technically, the share appears to have entered a new downward trend since February 2022.