This article first appeared on GuruFocus .
Release Date: November 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Octodec Investments Ltd ( JSE:OCT ) reported a 4.6% increase in revenue and an 8.2% increase in distributable income per share.
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The company achieved a strong collection rate, averaging 99%, indicating robust cash flow management.
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Core vacancies decreased from 14.9% to 12.3%, suggesting improved occupancy rates.
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The company successfully sold 17 properties for ZAR156.7 million, indicating progress in asset recycling.
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Octodec Investments Ltd ( JSE:OCT ) has made significant strides in environmental sustainability, with solar installations generating 4,469 kilowatts of power.
Negative Points
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The office sector remains challenging, with high vacancy rates despite some rental income growth.
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The company experienced a ZAR17.9 million annual loss due to the City of Tshwane vacating 12,086 square meters of office space.
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There was an increase in bad debt, partly due to tenants affected by the Lilian Ngoyi Street damage.
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The industrial portfolio faced a ZAR10.1 million annual loss from a tenant vacating 6,873 square meters.
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The company sold 17 properties at a loss of ZAR12 million to book value, reflecting challenges in asset disposal.
Q & A Highlights
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Q: What is the collection rate on government leases in the office sector? A: Charlene Conradie, from Octodec Investments Ltd, explained that while government tenants can be challenging, they do pay their accounts without letting them run into arrears. The exception is the City of Tshwane, which still owes outstanding money.
Q: Can you provide more details on repurposed or underutilized office buildings and the achieved rentals? A: Jeffrey Wapnick, Managing Director, noted that previously vacant PWD cellular offices were converted into smaller offices to attract new markets, achieving rentals between ZAR65 to ZAR85 per square meter. Recently, there has been significant demand for hairdresser spaces, with rentals moving to ZAR85 per square meter.
Q: Do you foresee the gap between distributable income and distributions decreasing? A: Jeffrey Wapnick stated that while there is no definitive answer, the company aims to pay out between 75% and 80% of distributable income as dividends. The goal is to decrease the Loan-to-Value (LTV) ratio to 35% and increase the Interest Coverage Ratio (ICR) to 2.5x before considering increasing the distribution payout ratio.
Q: What measures have been taken to improve occupancy at Killarney Mall? A: Jeffrey Wapnick mentioned that despite the intention to sell Killarney Mall, leasing efforts continue with increased marketing activities, community interactions, and social media presence to attract tenants.
Q: What is the current average debt margin on bank finance, and what margins are expected for debt refinance in FY26? A: Riaan Erasmus, Financial Director, is expected to provide a detailed response, but the company is actively working on negotiating better rates with funding partners.
Q: What is the exit yield planned for the disposal of Killarney Mall? A: Jeffrey Wapnick declined to disclose the exit yield due to the sensitive nature of the ongoing sale process.
Q: Can you provide further information on the rollout of Yethu City? A: Jeffrey Wapnick expressed excitement about the Yethu City project, noting that the design for Capitol Towers North is nearly complete. The company is cautious about financial commitments but sees potential in this investment.
Q: Which sector do the properties disposed of after year-end relate to, and are they sold close to NAV? A: Jeffrey Wapnick indicated that most disposed properties are industrial, particularly in Pretoria West. Riaan Erasmus added that properties were sold at a loss of ZAR12 million to book value, but post-year-end sales were at book value, aligning with the strategy to rationalize the portfolio.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
