Reporting on the year ended 31 March 2026
Emira Property Fund’s FY2026 performance is best understood not as a year of property growth, but as a year of strategic transformation. Measured purely by portfolio size, the business became smaller — the direct property portfolio fell in value from approximately R10,0 billion to R8,9 billion as significant disposals were completed across both the commercial and residential books, and revenue declined accordingly. Yet despite these reductions, distributable income per share increased by 3,7% to 129,53 cents, the full-year dividend rose 4,1% to 129,01 cents, net asset value improved to 2 095 cents per share, and the balance sheet emerged considerably stronger than it entered the year. This apparent contradiction is precisely the point — it reflects the success of management’s capital recycling strategy.

Earnings growth through capital discipline
Over the course of the year, Emira transferred R1,3 billion of South African assets and disposed of a further USD64,8 million of United States investments, while additional assets worth approximately R1,4 billion locally and USD14 million in the US were earmarked for further transfer. Rather than simply shrinking the portfolio, management used these disposals to unlock capital, reduce debt, strengthen liquidity and reposition the fund towards higher-return opportunities. The sharply lower funding costs that followed — net finance costs improved by 18,3% to R391,6 million — played a significant role in protecting distributable earnings even as the income-generating asset base contracted.

The operating environment supported this strategy well for most of the year. Improved electricity availability removed a critical constraint on South African commercial property, creating more predictable conditions for tenants and asset managers alike. Inflationary pressures moderated, and the gradual easing of interest rates began to relieve some of the funding-cost burden that had weighed on the sector. That said, the year did not end quietly; escalating global conflict, higher fuel and logistics costs, and renewed inflationary pressure in the closing months served as a reminder that active, hands-on asset management remains essential.

The SA commercial portfolio
On 31 March 2026, Emira directly held 35 commercial properties valued at R7,7 billion, down from 42 properties a year earlier. The portfolio is weighted towards urban retail at 58% of value, with office at 27% and industrial at 15% — a sectoral composition that has remained broadly stable through the disposal programme.

The standout operational achievement of the year was the improvement in vacancies and tenant retention. Commercial vacancy by gross lettable area fell to 4,1% from 6,4% — a substantial move that reflects both asset quality and the team’s leasing execution. Collections against billings remained exceptionally strong at 99,9%, confirming the quality of the tenant base and the resilience of portfolio cash flows.

The industrial portfolio was the standout performer. RTT Group’s reoccupation of previously vacated space at RTT ACSA Park transformed occupancy levels and reinforced the strength of Emira’s logistics and warehouse assets — industrial vacancies fell dramatically from 7,9% to just 0,7%, placing the fund well ahead of national market benchmarks. Urban retail held steady at 4,2% against a broader SAPOA market vacancy rate of 4,5%, confirming that the fund’s retail assets are performing above the sector average. Office vacancy at 9,9% remains the highest of the three sectors and continues to reflect the structural adjustment the segment is navigating, though the direction of travel is positive and occupancy remains comfortably below national averages.

Tenant retention improved markedly to 85,7% by gross lettable area, from 77,1% in the prior year — a particularly important metric in a constrained economy, where retaining existing tenants is both commercially efficient and a signal of genuine satisfaction with the spaces and management they occupy. Two large renewals anchored that result: RTT Group extended across 30,833 square metres, and FoodServe signed a new five-year lease at Denver Warehouse for 9,752 square metres. The weighted average lease expiry extended to 3,0 years from 2,8 years, with urban retail at 3,9 years providing the longest-dated income and 35,5% of gross rental secured beyond FY30.

On rental growth, the picture is nuanced but improving. Weighted average rent reversions narrowed to –3,7% from –5,6%, with leasing reversions across all three sectors improving materially and indicating a healthier demand environment. The pressure arises from contractual escalations outpacing market rental growth in a constrained consumer economy, but the weighted-average escalation across the in-force lease book of 6,3% provides a solid base for income growth in the years ahead. The disposal programme itself was executed with discipline — seven commercial properties were sold at a premium to book value, with management retaining the stronger-performing assets and releasing capital from properties that had reached optimal value within the portfolio.

The SA residential portfolio
The residential portfolio underwent its most significant reshaping in some time. Unit numbers reduced from 3,347 to 1,970 and portfolio value contracted to R1,1 billion from R1,9 billion through a combination of bulk and sectional-title disposals, with R814 million transferred during the year and a further R286 million held for sale. These reductions are strategic rather than distressed — the capital freed up is being redeployed into higher-returning opportunities.

For the properties retained, performance was encouraging. Vacancy in the held portfolio improved to 2,1% from 2,8%, with occupancy at 97,9% outperforming national benchmarks and validating management’s approach of retaining stronger-performing assets while realising value from non-core stock. Affordability constraints in the for-sale market continue to underpin rental demand as prospective buyers defer purchases, rental escalations have recovered to above-inflation levels, and arrears across the tenant base remained low. The average rent per unit stood at R5,991 at year-end.

Indirect investments
SA Corporate emerged as a new income contributor in FY26, with Emira having taken a 6,93% equity interest. The position contributed R43,8 million to distributable income at a closing share price of R3,25, with R200 million of shares disposed during the year, as the position was actively managed, and the investment’s carrying value settled at R624 million on the balance sheet.

The US investments felt the full force of currency headwinds. Operational performance remained strong — vacancies improved from 4,6% to 2,3%, and leasing activity stayed healthy — but the stronger rand relative to the US dollar compressed the rand-denominated contribution materially, with distributable income falling 30,8% to R156,5 million. Management has successfully monetised assets at values broadly in line with book value, and the trajectory of the US book is clearly one of managed realisation, with capital being repatriated for redeployment locally.

DL Invest Group in Poland was the most significant contributor to both earnings and value creation. Emira’s €100 million investment for a 45% equity interest has matured into a full-year income contribution — distributable income from this source more than tripled to R150,6 million — and the underlying platform has grown impressively. The portfolio now spans 42 properties across 735,272 square metres of gross lettable area, valued at EUR808,7 million, up from EUR688,8 million a year earlier, and delivered a fair value gain of R218,9 million during FY2026.

The sectoral composition is predominantly logistics at 72%, the weighted average lease expiry is a long 5,1 years, and vacancy is low at 3,2%. Three new logistics acquisitions were executed in Warsaw, Lodz and Bochnia, developments were completed at Psary and Bielsko Biała, and work is underway across seven additional sites. Strategically, the platform is also building its data centre exposure through acquired tenancies and a joint venture with Boosteroid, a global cloud operator. DL Invest’s successful issuance of a €350 million Eurobond, listed on the Luxembourg Stock Exchange, further validates the quality of the platform and its access to international capital. Poland continues to provide Emira with compelling exposure to one of Europe’s most attractive logistics and industrial property markets, and its contribution to both earnings and long-term value continues to grow.

Balance sheet and funding
One of the year’s most significant achievements was the strengthening of the balance sheet. The loan-to-value ratio fell from 36,3% to 30,2%, and the interest cover ratio improved from 2,5 times to 2,8 times, placing Emira in a considerably stronger financial position than it entered the year. Interest-bearing debt decreased from R6,195 billion to R5,980 billion, with 88% hedged, providing good protection against further rate movements.

Equally important is the liquidity position. At year-end, the fund held R1,57 billion in cash — significantly up on the prior year as disposal proceeds accumulated — and had access to a further R1,88 billion in undrawn facilities. Combined with proceeds still to be received from assets held for sale, the fund enters FY2027 with substantial financial firepower and the flexibility to pursue new investments while maintaining conservative gearing levels.

Net asset value
Net asset value per share increased 1,3% to 2,095 cents. The waterfall of movements tells the year’s story clearly. DL Invest’s value growth contributed 55,0 cents per share, share buybacks added 27,6 cents on a yield-accretive basis, the SA Corporate investment contributed 20,5 cents, and direct investment property valuations added a further 9,5 cents. Set against these gains, foreign exchange movements — principally the stronger rand against both the euro and the US dollar- erased 56,5 cents, US investments absorbed a 14,6 cent write-down, and expected credit losses and other items took a combined 14 cents. That the fund still delivered a positive NAV outcome despite that currency headwind reflects the portfolio’s underlying strength and the value generated across its multiple platforms.

Outlook: From repositioning to growth
The portfolio repositioning phase is now largely complete. Management has successfully reduced leverage, improved liquidity, enhanced portfolio quality and strengthened operational metrics across the retained asset base. The focus now shifts towards deploying available capital into opportunities capable of generating sustainable, long-term growth.

The acquisition of a strategic 23,6% stake in Octodec Investments Limited shortly after year-end represents an important first step in that next chapter. The investment provides exposure to a diversified portfolio of South African assets spread across Johannesburg and Tshwane, with concentrated exposure to CBD nodes — a position that complements Emira’s existing commercial portfolio and deliberately increases its South African footprint. It reflects management’s willingness to act decisively when value can be unlocked through disciplined investment.

Looking ahead, the executive distributable income per share target for FY27 is 133,53 cents, a 3,1% step-up on FY26’s delivery. Capital recycling will continue, with R1,4 billion in held-for-sale assets still to be realised and redeployed. For investors, FY2026 may ultimately be remembered as the year Emira completed its strategic reset. The fund emerges with a stronger balance sheet, improved portfolio quality, growing offshore earnings streams, a more diversified earnings base and substantial financial flexibility. The next phase of growth is only beginning.