Resilient takes action on water risks as earnings soar

Commercial property group Resilient , which invests in regional malls and shopping centres, has warned that water supply disruptions are a growing concern. 

The Jabulani Mall owner is taking steps to mitigate against the water crisis by implementing 2.5 days of backup water storage at each of its properties, ensuring protection against potential water supply disruptions, said the group in its financial results for the year to end-December. 

This move reflects a growing trend among property owners to safeguard their operations amid increasing water risks, with many others in the industry working to protect their bottom lines from these challenges.

Several of Resilient’s peers, such as Dipula and Emira, have taken similar actions in their properties.

The SA Property Owners Association has voiced concern that ongoing water challenges could severely undermine investor confidence as Johannesburg’s water infrastructure continues to deteriorate.

Resilient declared a dividend of 221.28c per share for the six months ending December 2024, bringing the total for the 2024 financial year to 440.25c per share. That is an 8.4% jump from last year and 1.7% above the group’s top-end forecast of 433c per share.

Resilient said earnings available for distribution grew due to its energy strategy, which reduced electricity costs by relying less on the grid and experiencing fewer outages in the 2024 financial year, along with contributions from overseas investments.

The SA portfolio increased 7.5% in comparable net property income (NPI) for the year, excluding Mahikeng Mall’s extension, despite an increase in planned maintenance.

Meanwhile, retail sales grew 3.5% in 2024, despite construction at several malls. The mining slump hurt turnover at some malls, such as Kathu Village and Tubatse Crossing, where the closure of an Edgars store for a new Checkers affected sales. On the flip side, Jabulani Mall saw a 13.6% boost in turnover with a new Pick n Pay store, while Mams Mall grew 13.1% due to Spar and Unimart.

Overall, rental rates grew 6.1%, with lease renewals for 278,542m² up 4.7% and new leases for 34,210m² 15.9% higher. In the fourth quarter of 2024, retail sales increased 5.5%, driven by October (+6.1%) and November (+9.6%), while December saw a 2.5% rise.

The group, which owns 27 retail centres covering 1.2-million square metres, reported that by December 2024, vacancies across the portfolio were at just 2%.

Independent property analyst Keillen Ndlovu said Resilient delivered strong results and performed well across most metrics.

“They exceeded their upgraded earnings guidance, and the outlook for 5.5% earnings growth in 2025 is strong, especially considering it’s on top of the 8.4% growth achieved in 2024. This is still above the market average of around 3% to 4%,” Ndlovu said. 

He said apart from local economic activity, retail spending in smaller towns and rural areas, where some of Resilient’s properties are located, is driven by social grant recipients and those supported by remittances from family members working in cities. 

The group’s offshore investments helped boost distributable earnings. Though the euro distribution from Lighthouse dropped 4.9% compared with the 2023 financial year , Resilient reported a 4.1% increase in the rand equivalent, driven by its forward exchange contracts.

“Resilient is well positioned as we enter the 2025 financial year . The continuous asset management initiatives in the SA portfolio ensures that the portfolio remains relevant and continues to serve the evolving demands of its customers,” the group said.

Its leasing activity led to 14.3% NPI growth in the French portfolio. A 50-basis point rate cut in the second half of 2024 helped the group, especially on unhedged or interest rate cap-hedged borrowings, with lower margins secured on funding renewals. However, the rebasing of expired in-the-money hedges in the second half of 2024 raised finance costs.

majavun@businesslive.co.za