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 six months to 30th September 2023 the company reported portfolio revenue up 12,5% and headline earnings per share (HEPS) down 90,2%. The company's net asset value (NAV) increased by 0,5% to 1703,4c per share. The company said, "Operationally, the Fund's investments in the USA continue to generally perform well however there have been certain larger tenant failures which have had an adverse impact on the current period's results. Interest rates remain persistently high and have negatively impacted the results, with rate increases greater than originally anticipated". Technically, the share appears to have entered a new upward trend in November 2023, but it is still early days.