Redefine Properties delivers good results across all metrics

Marc Wainer, CEO of Redefine, attributes this solid performance to the continued success of Redefine’s strategy which has expanded its local property portfolio through the acquisition of prime quality assets and rigorous cost control.

Redefine Properties today declared a strong set of results for the year ended 31 August 2013, with distribution of 68.7 cents per linked unit, up 7.3% compared to the previous year.

The JSE-listed property fund's net asset value increased by 8.6%.

Operating costs represented 20% of total revenue, from 23.7% in the prior year due to a strict focus on costs and the internalisation of electricity recoveries.

During the year, the fund acquired R1.3 billion of property assets at an average yield of 7.2%, approved developments in progress of R2,6 billion at an average yield of 8% and redevelopments underway of  R619 million at an average yield of 9%. It also concluded disposals of R366 million with a yield of 10,8%.

The company said its average value per property is now approaching R100 million, compared to R80 million a year ago.

Vacancies in lettable space improved from 5,8% to 5,3%. Redefine achieved an 80% tenant retention rate and a positive rental reversion of 6%.

Marc Wainer, CEO of Redefine, attributes this solid performance to the continued success of Redefine’s strategy which has expanded its local property portfolio through the acquisition of prime quality assets, and rigorous cost control, which have combined to produce strong income growth.

The results also reflected the consolidation of Fountainhead from March 27 this year, following Redefine’s acquisition of a controlling interest.

Wainer notes Redefine’s restructured property portfolio is well positioned to show continued improvement. “Despite the challenges facing the sector – a subdued trading environment, disproportionate increases in rates and taxes, and continued financial market volatility – we anticipate that Redefine’s distributable income will grow at a similar rate in the coming year,” says Wainer.

Redefine began trading as an SA REIT (Real Estate Investment Trust) on the JSE on 1 September 2013.

It manages a R41 billion portfolio of diversified property assets. The company’s local investment assets comprise  251 properties valued at R24 billion and a R6 billion portfolio of strategic listed property securities, while Fountainhead Property Trust, in which Redefine recently raised its interest to 61,9%, has an R11 billion property portfolio.

Redefine is internationally diversified through its 32,3% direct interest in Redefine International PLC, which is now listed on both the London and Johannesburg Stock Exchanges. Redefine also has a direct holding of 12.4% in ASX-listed Cromwell Property Group, as well as a further 13.7% indirect holding through Redefine International.

Wainer confirms that Redefine will substantially complete the refinement of its portfolio of property assets in the coming year. Redefine is well advanced in disposing 26 government-tenanted office properties valued at R2,2 billion through a new listing and subsequent to the year end has concluded agreements, subject to the usual conditions precedent, to acquire properties for an aggregate consideration of R3.4 billion.

In line with the property sector BEE scorecard, Redefine will also seek to improve its rating in the coming year. It also aims to continue embracing technology for communication internally and with all external stakeholders. Moreover, it intends to simplify its linked unit capital structure to ensure compliance with REIT legislation.

On the funding front, Redefine plans to reduce its already conservative loan-to-value ratio of just below 40%. Displaying solid credit metrics, Redefine Moody’s rating was unchanged and it continues to broaden its funding sources across the bond, debt and equity markets. After year end, Redefine became the first South African listed property company to launch an American Depositary Receipt Programme.