Our opinion on the current state of SAFARI(SAR)Safari (SAR) is a real estate investment trust (REIT) that owns seven operational properties in South Africa, comprising eight retail outlets and one day-care center, with a total value of R3.46 billion. The group's properties have a low vacancy rate of 3.03%, and the majority of its retail outlets are located in Gauteng. The gross lettable area (GLA) in South Africa is 175,167 square meters, and the group has reported arrears of 2.2%. However, Safari's shares are thinly traded, with some days seeing no trading volume at all.
On 18th August 2021, Safari provided an update on the impact of unrest and looting that occurred in South Africa. The company reported that Nkomo Village Centre in Atteridgeville and Denlyn Centre in Mamelodi suffered minimal damage, while Thabong Centre in Sebokeng experienced structural damage. Both Nkomo Village and Denlyn were closed for two days for repairs, and Thabong partially reopened on 6th August 2021. The company registered claims with its insurers for damages and loss of rental income due to business interruption.
In its results for the 15 months ending 30th June 2024, Safari reported an operating profit of R381.7 million, reflecting a 15.9% increase on a like-for-like basis. The fair value of its investment properties rose by 8.7% to R4.041 billion, up from R3.720 billion as of 31st March 2023. This growth was driven by the company's low vacancy rate of 2.49%, national tenants occupying 88% of the gross lettable area, a positive rental reversion ratio of 8.27%, and a healthy lease expiry profile.
While the share remains thinly traded, we believe it offers good value at current levels, particularly due to Safari's strong operational performance and favorable property portfolio metrics. However, the lack of liquidity in the share may make it less suitable for investors seeking frequent trading opportunities.
