Octodec posts double-digit distributable income growth at half mark

JSE-listed landlord Octodec has announced a double-digit growth in distributable income per share of 11% to 92.6 cents in the six months ended 28 February 2026, supported by improved funding costs, strategic asset sales, stable property income, and continued leasing momentum across key segments. The group posted its interim results in a Sens on Tuesday.

Rental collections for the real estate investment trust (Reit) remained strong at 98.5%, reflecting consistent tenant engagement and cash flow stability, while vacancies trended down, especially within the residential portfolio.

CEO Jeffrey Wapnick says residential remains a key contributor within the portfolio, supported by sustained demand for well-located, affordable accommodation.

Rental income increased by 5.5% during the period, vacancies reduced to 7.7%, and like-for-like rental growth of 5.7% reflects improved occupancy levels, steady rental escalations, and targeted asset enhancements.

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“Demand for well-located, cost-effective accommodation remains a key underpin of our performance, particularly in our core Tshwane portfolio,” says Wapnick. The company’s headquarters are also in the capital.

Wapnick says the retail portfolio showed encouraging signs of stabilisation, with street retail performance beginning to recover in key nodes, including Johannesburg, supported by improving footfall and trading conditions. Shopping centres delivered like-for-like rental growth of 7.7% with the portfolio (excluding the disposed Killarney Mall) effectively fully let.

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The office portfolio remained broadly stable, with management continuing to assess select assets for potential disposal or conversion. A continued demand for smaller warehouse and mini-industrial space also delivered steady growth for the industrial portfolio, with rental income increasing by 6.8%.

Overall, the group revenue performance for the six months under review improved when compared to the prior comparative period, with revenue increasing by 2.1% to R1.1 billion, thanks to the lower inflationary environment, reduced interest rates and a “disciplined focus on increasing the rental rates per m2 and letting of vacant spaces”.

Management has revised its 2026 guidance of a 0-4% growth in distributable income per share, to between 3% and 5% per share (2025: 134.5 cents per share), while maintaining a minimum dividend payout ratio of 77.5% of distributable income.

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Offloading property

Octodec’s property portfolio houses 200-odd buildings, internally valued at R11.2 billion in February 2026.

During the period, the group disposed of 10 non-core properties for R88.7 million, while also announcing the disposal of Killarney Mall for R397.5 million, subject to conditions. A number of conditions are required to be met to conclude this transaction, which include the successful completion of due diligence, and approval from the Competition Commission.

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If successful, the proceeds from the transaction will be utilised to reduce borrowings in the short term, with a long-term objective of acquiring yield-enhancing industrial or retail assets.

Deputy CEO and chief financial officer, Riaan Erasmus says these transactions form part of a broader initiative to reduce exposure to smaller, non-core and underperforming assets, while redirecting capital into larger, higher-quality opportunities with stronger income potential and scalability.

“We are making steady progress in reducing the long tail of smaller assets and concentrating the portfolio around properties that offer scale, stronger income profiles, and long-term relevance.”

He says this repositioning is supported by a solid balance sheet.

Octodec’s loan-to-value ratio improved to 37.3%, comfortably within the targeted range, while R1.1 billion in available facilities provides flexibility to support ongoing capital allocation.

“Refinancing during the period was achieved at more favourable margins and tenor, contributing to improved funding efficiency,” Erasmus adds.

The board of Octodec has declared an interim cash dividend of 64.5 cents per share, payable out of the company’s distributable income.

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Shareholding

Emira Property Fund has concluded its voluntary offer to shareholders of Octodec, increasing its total shareholding in Octodec to 23.5%. This is more than the initial target of a strategic 20% but still less than the ambitions of 34.9%.

James Day, CEO of Emira confirmed the final acquisition in a statement on the same day as the release of Octodec’s interim results on Tuesday.

“Seeing as our shareholding was predominantly acquired from major institutional shareholders, what was an already thinly traded share will be even more illiquid going forward. However, as a long-term strategic shareholder this is not an issue for Emira and we are excited to support Octodec’s growth and performance.”

At the time of the initial offer in April 2026, Octodec shares traded at R16.75. They’re now worth R16.50 (12 May 2026, 11am).

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