Redefine Properties banks on batch of new assets
Redefine’s R64.5 billion office, industrial and retail property portfolio spread across SA, Australia and Europe should continue to demonstrate resilient returns, CEO Andrew Konig said.
Last week, the JSE’s second-largest real estate investment trust (Reit) posted distribution of 41 cents per share, taking its full year distribution to 80 cents for the year ended 31 August 2015, translating into a 7.3% increase on the previous year.
Its distributable income rose by R875 million to exceed R3 billion, an increase of 36%. Total assets also increased by 22% to R70 billion, predominantly funded through expansion of the capital base.
Commenting on the results, Mr Konig says, “This has been a year of high activity in which we significantly expanded on the scope and quality of our investments. Our investment profile has also been raised considerably by our inclusion in the JSE Top 40 index, in this, our 15th year as a listed company.”
The company’s market capitalisation increased by about R20 billion to about R55 billion.
The share price rallied 20% from June 3 to August 12 in what Mr Konig believed was a buying spree pre-emptive of the Top 40 inclusion.
Redefine also saw a big inflow of money from foreign investors this year following an inclusion in the FTSE Nareit US real estate index. As a result, the value of Redefine shares in international investors’ hands doubled from R6.3bn (17.5%) to R12.6bn (22.4%) in the 12 months ending August. Seven years ago, Redefine’s foreign shareholding sat at a lowly R86.8m (1.4%).
Of the several property transactions concluded during the year under review, one of the most sizeable acquisitions has been the deal with Leaf Property Fund to acquire its 14 high-quality commercial property assets valued at R4.1 billion and the merger with Fountainhead Property Trust.
Fountainhead owns a R12bn shopping centre portfolio including large, regional malls such as Centurion Mall south of Pretoria and Blue Route Mall in Tokai, Cape Town.
Redefine’s acquisitions are roughly equivalent to the total portfolio value of mid-sized property stocks such as Vukile Properties and Emira Property Fund, placing Redefine as one of the sector’s most active dealmakers this year.
New developments in South Africa with an approved value of R3 billion are currently in progress, while refurbishment of existing properties in the portfolio, valued at R800 million, are also underway.
The company also invested R2.8bn to expand its offshore footprint, including a further investment of R1.6bn in Australian-listed Cromwell, taking Redefine’s stake in the company to close to 26%. Its offshore interests, including a 30% stake in Redefine International, represent 17% of total assets, which Mr Konig would like to grow to 20%-25%..
Redefine chairman Marc Wainer said one third of the company’s arrears came from the company’s R2.5bn portfolio of government- tenanted offices. Redefine may have finally found a buyer in Delta Property Fund who yesterday said it was in discussions to acquire its government-tenanted portfolio.
The company is expecting to deliver six to seven percent distribution growth on a per share basis for the forthcoming year.