Redefine maintains full-year distribution growth guidance at 5%

JSE-listed real estate investment trust Redefine Properties has declared a distribution of 47.3c a share for the six months ended February 28, a 5.5% improvement on the 44.8c a share for the comparable period in 2017, maintaining the company’s full-year growth guidance.

Total revenue and gross distributable income grew by 9.6% and 8.6% respectively, continuing to benefit from a number of quality acquisitions made in recent years, Redefine reported on Monday. Redefine’s international property investments contributed 25.3% of distributable income for the six months under review.

The company’s property portfolio was independently valued by external valuers, in February, resulting in a net increase in value of R1.3-billion. Diversified local property assets were valued at R68.6-billion at the end of February, and international real estate investments in the UK, Poland and Australia, are valued at R17-billion, representing 19.9% of total property assets.

Redefine FD Leon Kok said the company had achieved a healthy operating margin of 82.7% for the period, with the property cost ratio remaining stable at 33.9%. The overall occupancy rate improved to 95.8% and tenant retention measured 94.7%, compared with 86% in the comparable prior period.

Redefine continues to advance its strategy of diversifying, growing and improving the quality of its portfolio. Local acquisitions, subsequent to the reporting period, include the remaining 50% share of 115 West street (Alexander Forbes), with a gross lettable area (GLA) of 20 546 m² at an average initial yield of 9.25% for R750-million.

International acquisitions include a 25% equity share in Chariot Top Group for R907-million. Chariot owns a portfolio of 28 well-located retail properties throughout Poland, with two blue-chip tenants occupying more than 65% of the GLA.

The company is continuing with new developments; projects in progress total R3.5-billion at an average initial yield of 8.5%. Additionally, infrastructure projects totalling R648-million are under way for the S&J, Brackengate, Matlosana Mall and Atlantic Hills sites.

Redefine is in the process of installing about 3 000 smart electricity meters in 117 of the company’s buildings. Redefine is deploying smart water metering and control devices at 66 of its buildings, including all Cape Town-based properties.

The company has entered into agreements to sell 19.5% of its interest in Cromwell for R3.7-billion and its equity interest in Northpoint, both in Australia, for R1.6-billion, with proceeds expected to be received this month.

“While growth forecasts have been revised upwards to ±1.7% and 1.9% for 2018 and 2019 respectively, economic growth is not yet at a level to alleviate soft property fundamentals – twice the current growth on a sustained basis is required to make sustainable inroads,” said Redefine CEO Andrew Konig.

Redefine chairperson Marc Wainer will be stepping down in November, but will continue to serve as an executive director of the Redefine board. The company has started seeking a successor.