The buyback is part of its PI holder approved programme, which aims to grow its distribution to investors by reinvesting proceeds from the disposal of non-core assets through the timeous repurchase of PIs.
Emira CEO James Templeton says, "At opportune times in the past, the fund has bought back PIs. The price dip in South Africa's listed property sector earlier this year created the opportunity for further earnings-enhancing PI repurchases."
Meanwhile, its disposal of non-core assets continued with Fleetway House, Montana Value Centre, 261 Surrey Avenue and a further 12 sections of Georgian Place being transferred out of the fund since 30 June 2013. These sales totalled over R100 million, which could potentially be used for further repurchases or reinvestment in the rest of the portfolio.
It has also been taking advantage of low interest rates in the money markets, having recently issued R230 million of new 12-month unsecured commercial paper (CP) at an interest margin of 74 points above the 3-month JIBAR rate, resulting in an all-in rate of 5.87%. Restructuring of certain existing CP issues saw it issue R100 million of three-month paper and R399 million of six-month paper at all in rates of 5.34% and 5.83% respectively.
"By incrementally shifting this portion of our debt facilities from three-month CP to six- and 12-month CP, the weighted average expiry of the total debt facilities - which includes over R1.5 billion of long-term debt facilities with commercial banks and R500 million of domestic medium term notes - has been lengthened. This is a strategic decision and responds to a market that is demanding slightly longer dated money market instruments, displaying a preference for six- to 12-month CP over three-month CP.
"The fund is still taking advantage of relatively cheap short term debt, but we're gradually pushing out longer term debt in anticipation of interest rates increasing. We believe this should benefit the fund. We're also positioning ourselves to further lock in rates."
The fund enjoys funding from different commercial banks and money markets, with its diversified funding strategy minimising interest costs and reducing the risk to investors. The interest rate on over 70% of its total debt facilities has already been swapped out, providing certainty on interest costs for investors.
It is using these funds to finance capital projects including its major refurbishment and expansion for Wonderpark Shopping Centre in Pretoria, which will be extended from 63,000sqm to 90,000sqm of modern retail space.
Thanks to its major capital investment of R513 million in these improvements, it is set to claim super-regional shopping mall status and become one of the 15 largest malls in South Africa. For the fund, this will result in an estimated yield of 8.4% for the shopping centre, which is a strong performer in its portfolio and has achieved favourable compound growth.
The fund has a diversified portfolio of office, retail and industrial properties. Its assets comprise 146 properties valued at R9.4 billion and it has a market capitalisation of R7.3 billion. It is also internationally diversified through its direct interest in ASX-listed Growthpoint Properties Australia, valued at R537.1 million at 30 June 2013.
