BusinessDayTV Sep 18, 2026
With Rory Mackey, CEO of SA Corporate Real Estate
SA Corporate Real Estate is selling its weaker apartments to private buyers at exit yields of about 8.2% and using the money to settle debt costing more than 8.5%.
Most landlords sell assets to fund acquisitions. Rory Mackey is selling to reduce borrowings, and says the arithmetic works from the first day because the yield he gives up is lower than the interest rate he retires.
"we dispose of those to the retail market at very low yields circa 8.2% where we achieve considerable premium to both book and to acquisition"
Mackey runs a mid-cap South African landlord that has recycled 39% of its assets in three years, has no office exposure left, and reported a 7% rise in distributable income per share for the half. Rory Mackey, CEO of SA Corporate Real Estate, on BusinessDayTV.
The full segment is covered here so you can skip it.
Here are the 5 takeaways that matter.
Key Takeaways
Residential led the half with 6.1% like-for-like net property income growth, ahead of retail at 5.6% and industrial at 3.2%
Convenience retail is close to 70% of lettable space, underpinned by groceries and pharmacy, which is why he expects above-inflation growth to hold
Municipal costs are the line he cannot control and the one working against the rest of the portfolio
39% of assets have been recycled in three years, and he treats that as the company's character rather than a one-off program
Apartments are leaving at about 8.2% while the debt being repaid costs above 8.5%, which he says adds to earnings immediately
Loan-to-value goes to 38.9% and hedging to about 75% once the last two disposals are registered
1. Residential Led at 6.1%
The show set up the half: distributable income per share up 7%, helped by profit on residential apartment sales, and like-for-like net property income up 5.5% to more than R655 million, which it described as above inflation. Asked what drove it, Mackey went straight to the residential book.
The best-performing portfolio
The biggest drivers clearly our residential portfolio performed exceptionally well with like-for-like growth in NPI 6.1%.
Rory Mackey
Retail followed at 5.6% and industrial at 3.2%. Vacancies performed well, he said, and that supported the growth figure.
How he describes the asset base
We have a very robust and defensive portfolio.
Rory Mackey
Residential growth came from strong rental increases, retail from trading density growth well above inflation. He attached a caveat to the retail part.
The warning inside the good number
albeit clearly the changing environment is starting to have some pressure on consumers
Rory Mackey
2. Holding Above Inflation
Asked how sustainable 5.5% is in the current market, Mackey worked through the portfolio one segment at a time. A residential portfolio should grow with inflation, he said, and his does slightly better.
Why scale gets him more than inflation
generally a residential portfolio should be able to grow at inflation we achieve a little bit higher than that because we differentiate ourselves from other players given our scale
Rory Mackey
Scale also lets him keep taking property management costs down. One cost line does not cooperate.
The expense outside his control
obviously the thing that's not in our control are municipal expenses that works against that
Rory Mackey
Retail holds up for a different reason: what the tenants sell.
The mix he leans on
Our convenience retail represents close to 70% of our gross leasable area and strongly underpinned by groceries and pharmaceutical.
Rory Mackey
Industrial is the laggard at 3.2%, which he said comes off healthy escalations of around 6% in an established portfolio. He is not troubled by it.
Full occupancy at below-market rents
But we do have zero vacancy and so we continue to need to be competitive with rentals
Rory Mackey
Rents there sit a little below competitors', he said, which is what makes the level sustainable. On that basis he expects the growth to hold to the end of the year and beyond.
3. Zambia Into a REIT
Beyond South Africa, Mackey pointed to one offshore position.
The growth outside the country
We do also have an investment in Zambia and we've seen very strong growth in Zambia
Rory Mackey
Going into 2027 there is both portfolio growth and a tax benefit, he said, as that investment is restructured into a listed real estate investment trust.
4. R1.73B of Disposals
Asked what is behind R1.73 billion of property disposals in progress and where the money goes, Mackey framed selling as a habit rather than a reaction.
Recycling as policy
We strongly believe in recycling capital and as a smaller mid-cap we're able to do that to good effect.
Rory Mackey
The scale of it
In fact if you look at the last 3 years we've actually recycled 39% of our assets.
Rory Mackey
He gave four reasons for the current sales. The first is exiting deteriorating locations, which covered a retail disposal. The second is tenant concentration.
The tenant risk he chose to remove
we had a very large 70,000 square meters to a large blue chip who are looking in a couple years not to renew and so we elected to divest from that
Rory Mackey
The third is a category that no longer exists in the portfolio.
Offices are gone
We've obviously eliminated our office exposure
Rory Mackey
The fourth is the continuing sale of weaker residential apartments to private buyers.
5. 8.2% Out, 8.5% Repaid
The apartment sales are the ones he is most pleased with, because of the price and the use of the proceeds.
What the apartments fetch
we dispose of those to the retail market at very low yields circa 8.2% where we achieve considerable premium to both book and to acquisition
Rory Mackey
He put those premiums at about 18% above book value and roughly 39% above what the company paid.
The proceeds are going to debt reduction rather than new assets. The company made acquisitions in the past and has been reducing leverage since.
Where the balance sheet lands
So, some of it is going to de-gearing
Rory Mackey
Once the last two transactions are lodged at the deeds office, he said, loan-to-value falls to 38.9% and hedging rises to about 75%. That is where he wants the balance sheet to be. And because the assets leave at about 8.2% while the debt they repay costs more than 8.5%, the trade adds to earnings from the start.
Over time, he said, the recycling is meant to refine the portfolio rather than shrink it — the same work that has taken five years and left the company with better-quality, more defensive assets.
Bonus Insights
The show supplied the headline figures. Its introduction carried the 7% rise in distributable income per share, the R655 million of like-for-like net property income and the description of that growth as above inflation, before Mackey spoke.
The strong half came partly from selling, not just letting. The show attributed part of the distributable income growth to profit on residential apartment sales — the same disposals Mackey describes as ongoing.
Mackey's bottom line is that a mid-cap landlord can keep growing income above inflation by staying in non-discretionary retail and rental housing, and that selling the weakest apartments at about 8.2% to retire debt above 8.5% improves both the portfolio and the earnings at the same time.
Products, Companies & Tools Mentioned
SA Corporate Real Estate (Reported a 7% rise in distributable income per share for the half, with residential net property income up 6.1%, no remaining office exposure and loan-to-value heading to 38.9%)
Watch the full episode:
More Rory Mackey interviews and podcast appearances
If this was worth your time, send it to someone who follows the name.
Get the latest market chatter as it happens: