JSE-listed Octodec’s absorption of Premium Properties provided the scale for the enlarged company to embark on bigger, higher-yielding property developments, attract better financing options and continue its ambitions of revitalising properties within Gauteng’s central business districts (CBDs).

Following the tie-up in September, the real estate investment trust (Reit) boasted a portfolio of 320 residential, retail, industrial and office properties, valued at about R10.9-billion, which were managed by City Property Administration.

“The diversified portfolio offers investors exposure to the most significant residential property portfolio of any JSE-listed Reit with a unique focus on the high-growth nodes of the Pretoria and Johannesburg CBDs, as well as surrounding areas,” explained Octodec MD Jeffrey Wapnick on Thursday.

The capacity and funding ability created by the merger enabled Octodec to pursue the larger developments and the parent company would now combine the parallel strategies of the newly merged parties to scale up its CBD focus, which was “attracting positive responses” from national retailers looking to service the CBD market and residential tenants seeking upmarket accommodation.

“1 on Mutual, which broke ground in June this year, is the perfect example of this trend and will be popular with upcoming young urban professionals looking for a place to work, stay and play in the city,” he said.

The R140.1-million greenfield mixed-use property was adjacent to Church Square in the Pretoria CBD and comprised 154 residential units, ground floor retail space and parking.

The project would deliver a fully let initial yield of 8% when completed in 2016.

Octodec was also developing or redeveloping several other projects around and within the CBDs.

The R333-million greenfield residential redevelopment of the Centre Forum, in the Pretoria CBD, comprising 400 units and ground floor retail and parking, would be completed in late 2016, delivering a fully let yield of 8.1%.

The company was also bedding down several property developments outside the conventional CBD in Pretoria.

Wapnick noted that Pretoria was still South Africa’s administrative capital, in addition to being a significant educational hub, both of which presented development opportunities in the residential and office segments.

Even for retailers, he said, the region was historically “golden”.

Octodec was also progressing the redevelopment of Bosman Place, in the Johannesburg CBD.

The R116-million project, which would be completed in March 2015, involved the conversion of offices into 225 residential units, with a retail component, with a fully let initial yield of 8.2%.

The company also inherited a number of recently started projects from Premium’s portfolio.

These included the second phase of the redevelopment of the retail component of the Silver Place mixed-use property, also in Pretoria, at a cost of R39.7-million.

The retail project, which would attract a fully let initial yield of 9% a year, was scheduled for completion early in 2015.

The projects were contributing to the upliftment of the CBDs, as well as enhancing the value of the portfolio and sustainable growing dividends in the future, Wapnick commented.

“Barring unforeseen events, current indications are that the increase in dividend per share for the next twelve-month period should be between 7% and 9%,” he said.

The increased size of Octodec was expected to attract interest from a wider group of investors and would result in increased liquidity and trading volumes.

The enlarged Octodec group currently had more than R740-million of unused facilities in place.

Octodec's increased size and diversification would also attract financing at more competitive rates and lead to lower funding costs, Wapnick said.