Redefine Properties acknowledges tough operating environment

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Redefine CEO Andrew Konig says almost every property sector in the economy is under huge pressure and everyone is feeling the pinch. Redefine CEO Andrew Konig says almost every property sector in the economy is under huge pressure and everyone is feeling the pinch.

Redefine Properties (JSE: RDF) shrugged off a sluggish economic recovery to increase its full year distribution by 5.5% and to grow its net asset value by 5.9% in the 2018 financial year.

However, the company with a portfolio of R91.3bn, has lower growth expectations of between 4 and 5% for 2019.

Total distributions rose to 97.1c per share in the year to end-August, from 92c in the matching period a year ago, the company said on Monday.

Distributable income rose 8.2% to R5.22bn, of which the international property investments contributed 24%.

Total growth in distributions for 2019 is expected to between 4% and 5%, reflecting an outlook for tepid economic growth, according to Redefine.

Redefine, one of SA’s largest real estate investment trusts (reits), generates the bulk of rental income from its local portfolio, which was worth R72.4bn in the review period. The local portfolio is spread across retail, office and industrial properties.

Its international real estate investments, valued at R18.9bn, represented 20.7% of total property assets.

“Almost every sector in the economy is under huge pressure and everyone is feeling the pinch. However, we are up for the challenge and will continue deploying capital in SA and abroad, developing properties that are well located, with strong upside potential,” says Redefine CEO Andrew Konig.

“Apart from a less supportive global backdrop, there are concerns that decisive [local] economic policy interventions will only be taken after next year’s general elections.

“The result is that the domestic economic outlook and general confidence remain uninspiring, translating into continued weak domestic property fundamentals.”

Property portfolio revenue rose to R8.13bn, from R7.77bn a year before. The property portfolio contributed 96.3% of total revenue, with the remaining 3.7% arising from investment income.

Vacancies were relatively stable at 4.5% during the period, from 4.6% a year ago.

The value of the group property portfolio rose by R2.6bn, which the company attributed to the contribution from properties that had been redeveloped in recent years, according to the results statement.

The company remained very active on the development front during the year, with R5.3 billion deployed into total development activity – notably via an expansion into logistics sector in Poland.   

A highlight during the reporting period was the R8.9 billion being realised through the recycling of capital via the sale of secondary assets, with the Northpoint and Cromwell sales alone fetching R5.2 billion.   

Capital was deployed by expanding offshore through investments into a logistic platform in Poland, acquiring shares in listed EPP and developing student accommodation facilities in Australia, while locally, acquiring the remaining 50% share of 115 West Street for R751 million and developing / redeveloping and expanding well-located properties to the tune of R4.7 billion.

Meanwhile, several new board appointments were made during the year to broaden diversity and skills.

Marc Wainer will remain Redefine’s executive Chairman until an independent non-executive Chairman is appointed. Further changes to the board, effective from 2 November 2018 include: independent non-executive directors David Nathan and Phumzile Langeni have stepped down from the board and Bernie Nackan has indicated that he will not stand for re-election at the next annual general meeting.

Read more on:

Redefine Properties  |  Marc Wainer  |  Andrew Konig  |  Cromwell Property Group  |  Echo Polska Properties (EPP)
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