Redefine’s net arrears improve despite tough conditions

More of Redefine Properties’ tenants paid their rents on time, despite the tough economic conditions.

Net arrears improved to R39.8m for the year to end-August, representing 6.3% of gross monthly rental, down from 8.3% in 2015, the company said in its results statement on Thursday.

Redefine Properties has given investors the option of receiving a 44.3c cash dividend or the equivalent in new shares.

This takes the real estate investment trust’s (Reit’s) total dividend for the year to end-August to 86c, a 7.5% growth on the previous year’s 80c.

Redefine’s market capitalisation of R58bn makes it the third-largest constituent of the JSE’s Reit index, behind Growthpoint, which weighs in at R72bn, and Intu, at R60bn.

Total revenue was flat at R6.65bn and aftertax profit declined 18% to R4.61bn, the company said on Thursday.

Redefine sold 15 government-tenanted offices worth about R1.3bn to Delta Property Fund in exchange for 162-million shares. It intends to sell its remaining government-tenanted buildings on a deal-by-deal basis, it said in its results statement.

While exiting the government-building market, Redefine is moving into student accommodation.

It acquired 51% of Respublica Student Living for R438.6m, and is converting its office complexes Yale Village in Parktown and Hatfield Square into student residencies.

Revenue from its investments, which include a 30.1% stake in London- and Johannesburg-listed Redefine International, contributed 1.5% of the group’s total, down from 5.2% in 2015.

Redefine said its vacancy rate improved to 4.9% from the previous year’s 5.4%. Tenants paid on average 3.3% higher rentals, and its retention rate was a "pleasing" 92%.

The geographic spread of Redefine’s property portfolio is 65.6% in Gauteng, 8% in KwaZulu-Natal and 26.4% in the rest of SA.

Industrial properties make up 42.9% of its portfolio, offices 28.5%, retail 28% and specialist properties 0.6%.