Redefine ups interim distribution in tough conditions
The value of its property portfolio increased marginally to R92bn in the six months to end-February, boosted by its offshore investments
Redefine Properties, which said last week that Sipho Pityana had replaced Marc Wainer as its chair, announced on Monday it has raised its interim distribution to investors 4% to 49.19c per share.
Distributable income in the six months to end-February grew 4.8% to R2.7bn, versus 8.6% a year before.
Head of research at Anchor Stockbrokers, Craig Smith, said Redefine’s dividend growth rate was at the lower end of its guidance, but that was expected given tough conditions in SA.
“Overall, it’s more or less in line with guidance but does again highlight the weak local property fundamentals. Their offshore investments have definitely contributed positively to performance, especially EPP in Poland,” Smith said.
The real estate investment trust (Reit) — which invests in SA, Poland, the UK and Australia — said its property portfolio was worth R92bn at the end of the period, a marginal increase.
In SA, the “active portfolio vacancy rate” rose to 5.7% from 4.5% as vacancies rose in the student accommodation portfolio.
In that portfolio, the average occupancy rate fell to 79% from 91.7%. Net arrears climbed to R90.9m from R76m, representing 11.5% of gross monthly rentals.
In Poland, the logistics unit’s active portfolio vacancy rose to 6.8% from 1.5%.
Redefine said that given the prolonged decline in the share price of RDI Reit, which invests in the UK and Germany, “as well as the existence of other impairment indicators”, its investment in RDI was impaired by R194m.
The landlord said weak business confidence in SA “is a persistent trend which is fuelled by the slow pace of structural reforms, power blackouts and higher inflationary pressures”.
Dampened consumer and business confidence, “and floundering investment spending”, will weigh on the local property market.
Redefine said it expects to maintain its 4% distribution growth rate for the full 2019 financial year amid ongoing uncertainty.
Redefine CEO Andrew Konig said many companies had taken wait-and-see approaches ahead of the SA elections.
“Leasing is a long-term game and there is little confidence. We hope that a positive result will be achieved. Then our president can be bold and pull the levers he has to achieve the easy wins at least,” he said.
Redefine said it added another 1 megawatt peak (MWp) of solar energy capacity in the interim period, increasing its total capacity to 23.5MWp.
“We will continue with similar investments in the second half of the year and plan to pilot energy storage technologies as another alternative in the second half of 2019.”
On Friday, it said Pityana had taken over as chair from Wainer, who would stay on as an executive director.
Pityana founded Izingwe Capital and is chair of AngloGold Ashanti and Onelogix Group. He is the president of Business Unity SA and a director of Business Leadership SA.