The latest annual report from Oryx Properties Limited and its subsidiaries for the end of the 2021 financial year shows overall liquidity improved by 144% from N$108 million in 2020 to N$264 million. Despite poor market conditions, the group’s rental from operating income increased to N$336 million (2020: N$329 million) and finance costs reduced to N$81 million (2020: N$94 million). Oryx is a Namibian property investment fund with a N$2.8 billion property portfolio and exposure to all segments of the real estate industry.
“Despite the economic headwinds, Oryx delivered acceptable financial results. This is testament to the diversity and skills of the board and executive management as well as the quality of our portfolio,” stated Oryx chairman, Peter Kazmaier, in the annual report.
Kazmaier continued: “We saw tenant vacancies rise consistently, mainly across the retail and office sectors. Despite this, Oryx still succeeded in keeping vacancies down to manageable levels. One of the biggest challenges was determining the correct level of support for tenants while complying with a strategy of growing a portfolio and not surpassing the internal gearing limit of 40%. Making the right decision to support a certain tenant and not another was difficult. Supporting tenants seemed to be bearing fruit as the regulations were relaxed and the economy slowly started its recovery, only for harsher regulations to be implemented later.”
Despite the economic impact of Covid-19, Oryx had a reasonable year with reasonable financial results and relatively low vacancies. Kazmaier added that given market conditions, it was appropriate for Oryx to adjust its strategy from aggressively pursuing growth to consolidating its property portfolio and actively managing its costs.
This interim strategy is expected to give the group breathing room to strengthen their balance sheet, manage cash flow and optimise the property portfolio, resulting in a stronger, more sustainable business. Over the longer term, Oryx remains committed to growing the size of its fund, the quality of distributions and continued diversification both in Namibia as well as offshore. Kazmaier noted that risks to domestic growth are still dominated by uncertainty around the impact of the pandemic, particularly regarding the success of vaccinations in Namibia and around the globe. The Oryx chairman stated that besides these risks, domestic economic performance is expected to improve during 2022, following what is estimated to be the country’s deepest contraction in 2020 and 2021.
“Re-opening the borders to foreign tourists would bolster economic recovery. An improved tourism sector would improve the unemployment rates and have benefits for several downstream businesses. These businesses include tenants based in our shopping centres. Although a recovery is expected, it may not be strong enough to re-employ the people who lost their jobs or save businesses facing financial strain. This means that Oryx can expect to operate in a challenging environment for the foreseeable future,” Kazmaier stated.
According to the recent annual report, Oryx Properties has moved away from a pure growth strategy towards a short-term, tactical strategy of consolidation.
“This is an interim two-year plan to strengthen our balance sheet, improve our cash flow and optimise our portfolio. In addition, we restructured our funding and reduced our currency risk,” Kazmaier explained.
The chairman also anticipates challenges ahead, specifically in the retail and office sectors, where he said significant attention will need to be given to maintaining existing income streams. “Oryx plans to fund certain identified renewal projects of existing assets through the disposal of non-core properties while allocating available funds to debt repayment and yield-enhancing investments. We will focus on making relatively small investments that will grow and protect our existing income stream. We would also consider investments that derisk the group’s profile and reduce our over-dependence on Maerua Mall retail,” Kazmaier stated. Oryx Properties currently owns a real estate portfolio comprised of 28 retails, industrial, office and residential properties. The group has offshore exposure through an investment in Tower Property Fund, a South African Real Estate Investment Trust (REIT), and a 26% investment in TPF International Limited (TIL) with an underlying Croatian portfolio valued at €82.2 million.