Johannesburg - Rockcastle Global Real Estate shares shot up nearly 5 percent on the JSE on Friday after the group announced that it had concluded two separate preliminary agreements to acquire three shopping centres in Poland for a total of €522 million (R7.83 billion).
These agreements were concluded after Rockcastle’s interim financial reporting period to June.
The agreements involve the acquisition of the 92?425m² Bonarka City Centre in Krakow and Energit, the owner and energy management of the centre, from Trios Dutch Holdings for about €361m and the shopping centres known as Focus Park Zielona Góra and Focus Mall Piotrków Trybunalski for a total of €161m.
Of the total gross lettable area of Bonarka City Centre, 20 620m² was owned under separate ownership by Auchan. These proposed acquisitions follow Rockcastle in June acquiring the Forum Liberec shopping centre in the Czech Republic for €80m and the retail park adjoining Platan Shopping Centre in Zabrze in Poland for about €4.8m.
Rockcastle – which has a primary listing on both the JSE and Stock Market of Mauritius – last year also acquired the Karolinka, Platan, Pogoria and Solaris shopping centres in Poland.Spiro Noussis, the chief executive of Rockcastle Global Real Estate, whose objectives are to invest in direct property in central and eastern Europe and listed real estate securities globally, said on Friday the low level of gearing currently being maintained by the company was in anticipation of several large property acquisitions that were expected to be completed by the end of this calendar year.
Rockcastle’s loan to value ratio declined to 33.9 percent in June from 41.6 percent in December last year.Noussis said the proactive decision by Rockcastle’s management in the first quarter of this year to reduce gearing and the company’s investment bias towards the US, UK and European markets had also provided substantial protection from market volatility. “This was most evident in the aftermath of the UK’s EU referendum result crisis where the defensive positioning of the portfolio proved its quality,” he said.
Noussis said the company’s strategy to focus on investing in direct properties and developments had resulted in these assets increasing from about 17 percent to 23 percent of total investment assets during the six months to June.
The value of Rockcastle’s investment property increased to $466.98m (R6.27bn) in June from $58.7m in December and that of its investment property under development to $55.3m from $7.4m.
In the same six month period, the value of the company’s listed security investments declined by almost 15 percent to $1.84m from $2.16m.
Noussis said the combined value of the company’s existing assets in Poland and the Czech Republic was now about $519m after an additional $140m was invested in retail property in the Czech Republic and Poland in the past six months.
“The increase in exposure to direct property provides the company with the flexibility to concentrate its listed security portfolio on a core number of property stocks that meet Rockcastle’s distribution growth, market capitalisation and liquidity requirements,” he said.
Noussis added that Rockcastle’s recent entry into the retail sector in the Czech Republic represented a significant milestone in the company’s ambitions to extend its reach into other countries in the region and substantial additional capital was expected to be invested in the region.
Rockcastle on Friday reported an 8.2 percent growth in dividends a share to 4.782c for the six months to June from 4.42c in the previous corresponding period.
The company forecast growth in dividends of between 11 percent and 13 percent for the six months to December. Rockcastle shares rose 4.54 percent on the JSE on Friday to close at R35.23.
BUSINESS REPORT