Redefine Properties beefs up asset base to R50bn mark
Redefine Properties CEO, Andrew Konig attributes the strong performance to the disciplined execution of its strategy, quality acquisitions, sectoral and geographic diversification of its property portfolio.
Hybrid real estate investment trust (Reit) Redefine Properties on Thursday said for the first time it had grown the size of its portfolio exceeding the R50 billion mark, with its property income earning asset base now valued at R51 billion.
Announcing financial results for the year ending 31 August 2014, the company declared 8.4% increase in its full year distribution to 74.54 cents per share.
Its net asset value (NAV) per share had increased 12.1% to R9.76, while total revenue increased to R5.3 billion from R3.7 billion for the same period in 2013.
Net operating profit increased from R2.8 billion in 2013 to R3.4 billion in 2014 and profit before taxation grew to R3.4 billion from R1.5 billion.
Its net asset value per linked unit, excluding deferred tax and NCI, increased to 976 cents in 2014 from 870 cents in 2013 while net tangible asset value per linked unit, excluding deferred tax and NCI, grew to 819 cents from 691 cents.
Andrew Konig, CEO of Redefine, attributes Redefine’s strong performance to the disciplined execution of its strategy, quality acquisitions, sectoral and geographic diversification of its property portfolio, tight cost controls and vigorous leasing with high levels of tenant retention.
Konig comments: “the results are underpinned by a solid performance from our core property portfolio, bolstered by the acquisitions we made during the previous financial year. Our international operations also made a strong contribution to this set of results.”
Redefine has a market capitalisation of R36.4 billion, representing an increase of 20.5%, driven mainly by R4.5 billion of new equity raised in the current year and a further R2.5 billion subsequently.
On 31 August 2014, its directly held local diversified property portfolio was valued at R31.5 billion. Fountainhead Property Trust, in which Redefine increased its equity interest to 65.9%, has a R12.2 billion property portfolio, comprised mostly of retail properties.
Providing further geographic diversification, Redefine increased its international property investments by R3.6 billion during the year to a total R7.4 billion, equating to 14.5% of its property assets. Redefine has a 30.1% direct interest in Redefine International PLC and a R3.9 billion presence in the Australian property market, with 50% interest in North Sydney’s landmark tower, Northpoint, and a 15.9% holding in ASX-listed Cromwell Property Group, as well as a 10% indirect equity interest through Redefine International. Redefine’s international operations contributed 17.2% of its distributable income, up from 15% the prior year.
During the year Redefine acquired 26 properties with a gross lettable area (GLA) of about 275,000m2, for a total consideration of R4.6bn. It disposed of 10 properties totalling R202m at an average yield of 11%. Vvacancies remained unchanged at 5.5%,
Its acquisition of Annuity Properties, effective from 1 March 2014, will ultimately be fully integrated into the Redefine structure. Konig points out: “The R1.9 billion portfolio comprises eighteen properties. Nine account for 75% of the Annuity portfolio value, and are suitable for Redefine’s core portfolio. These include two shopping centres, three industrial and three office properties, as well as a Virgin Active.”
Subsequent to year end, Redefine identified the opportunity to gain a strategic foothold in Emira Property Fund on a yield enhancing basis, and acquired a 13.7% stake in Emira for R1.1 billion.
Looking ahead, the company said the upward interest rate cycle, disproportionate increases in administered prices and a lacklustre trading environment would “pose challenges but will no doubt also create opportunities in the coming year”.