Redefine upbeat after results
Property group says rationalising portfolio protected against uncertainty and helped boost distributions
Redefine Properties’ decision to rationalise its portfolio some six years ago has enabled it to meet market expectations, says CEO Andrew Konig.
The diversified real estate investment trust grew its distributions 7.5% to 44.82c per share in the six months to February, in line with expectations.
Various property groups are expected to struggle to come close to double-digit income payouts in the current reporting period, analysts have forecast.
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Stanlib forecast 7.5% growth in distributions on average across the sector over the next year.
Speaking at a media presentation, Konig said Redefine had positioned itself to stave off uncertainty in SA’s financial markets and economy, especially related to political events.
"I believe that Redefine will be able to manage future shocks which could occur later this year. There is uncertainty being driven by political issues playing out ahead of the ANC elective conference," he said.
The property group, which has a market capitalisation of about R60bn, was conservatively geared.
Interest-bearing debt represented only 39.8% of the value of the group’s property assets.
Redefine’s diversified local property portfolio was valued at R67.7bn at the end of the reporting period. Its international real estate investments were valued at R16.4bn.
This meant its total portfolio grew R11.4bn to R84.1bn during the period. The group benefited largely from having invested in Poland and western Europe in recent years.
These investments had boosted total group income by paying out pound-and euro-denominated dividends.
International investments contributed 22.7% to Redefine’s distributable income and made up 19.5% of total assets.
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Redefine acquired The Pivotal Fund in a share-swap transaction during the period. Through this acquisition, Redefine acquired 32 Pivotal properties valued at R10.4bn, including developments in progress and land holdings for future development.
Nesi Chetty, the head of listed property at Momentum Asset Management, said Redefine’s results were "average" in a difficult environment.
"Achieving 7.5% in this environment is okay. It’s a large portfolio and it is difficult to do very large value-accretive deals," he said.
"Vacancies are low overall in the portfolio and their retail assets are starting to see some pressure. Trading densities may slow."
Stanlib portfolio manager Ahmed Motara said Redefine had just about met expectations and it had made the right call by saying it would sell noncore assets in the near future.
"Redefine also highlighted it will be looking over time at disposing of noncore holdings, a move we see as designed to better allocate future capital towards better growth vehicles.
"Overall, we expect the company is well positioned to achieve market expectations in a difficult operating environment," said Motara.