Rockcastle Global Real Estate results fly past expectations

Rockcastle Global Real Estate CEO, Craig Hallowes said the company’s $1bn portfolio was well diversified among a number of global listed property markets, with a bias towards the US, Europe, Canada, Singapore and the UK.

ALTX-listed Rockcastle Global Real Estate, one of Resilient group’s rand-hedge property plays, on Tuesday declared a dividend of 4.07 US cents for the six months to December 31 in line with market expectations.

The interim payout represents a 4% increase on an annualised basis.

Rockcastle was one of the JSE’s top five performing property stocks last year with a total return of 40%, figures from Catalyst Fund Managers show. The share price was up 15% over the past two months alone, no doubt owing to rand jitters.

The company’s market capitalisation has ballooned from about R83m at listing in August 2012 to R8bn. The hybrid fund’s portfolio consists mostly of listed real estate investment trusts on various exchanges.

Rockcastle CEO Craig Hallowes said the company’s $1bn portfolio was well diversified among a number of global listed property markets, with a bias towards the US, Europe, Canada, Singapore and the UK. The fund has a 60% exposure to the retail property market, with the rest split between offices, residential, industrial, hotels and healthcare.

Rockcastle recently also spread its interests to the rapidly growing African real estate market through a direct investment in two Zambian shopping centre developments: the 12,500m² Kafubu Mall in Ndola and Kitwe’s 29,000m² Mukuba Mall.

Kafubu Mall is on schedule to open in April. The centre is more than 90% let and will be occupied by Shoprite, Edcon, Foschini, Pepkor and other national retailers. Earthworks on Mukuba Mall, which will be anchored by Shoprite, Pick n Pay, Woolworths and Game, began in October last year. Rockcastle will acquire a 50% interest in both developments at a 9.5% yield.

Mr Hallowes said the company was also looking at further investments in direct retail property developments in the rest of Africa, of which details will be provided.

During the six-month period, management raised $235.2m of equity through the issue of 180-million shares.

Although dilutionary in the short-term, Rockcastle has increased its exposure to higher growth stocks trading at lower yields. Management has warned this will limit income growth to about 4% this financial year but will boost future growth. The stock traded at a forward dividend yield of about 5.5% on Tuesday.