Johannesburg - Depreciation of the rand significantly boosted the financial performance of Redefine International in the six months to February.
The listed property firm on Wednesday reported 34 percent rand-based growth in distributable earnings to 27.6c a share based on current exchange rates from 20.58c in the previous corresponding period. This follows Redefine International in London reporting 5.1 percent growth in distributions.
Redefine International is focused on property investment in large, well-developed economies. Its portfolio, valued at more than £1 billion (R18bn), is geographically diversified across the UK, Europe and Australia. It has exposure to the office, retail, industrial and hotel sectors.
Occupancy across the portfolio decreased marginally to 97.2 percent from 97.3 percent in August, but was anticipated and largely due to taking back 1 337.80m2 of retail space for redevelopment opportunities.
Mike Watters, the chief executive, said the performance potentially made the company an attractive rand-hedge investment.
However, he stressed that investors had to first determine if Redefine International was an attractive investment in sterling and, thereafter, look at the rand-hedge potential.
Redefine International was the best performing property share on the JSE last year and joint second top-performing JSE share overall.
Watters attributed the company’s positive interim results to a solid performance from all its business segments, its successful restructuring and conversion to a UK real estate investment trust and favourable exchange rates for investors in South Africa.
“Redefine International has delivered on our restructuring strategy for investors, which we began 18 months ago. This shows in our numbers, our heightened market position, as well as our strengthened board and internal management.
“We’ve improved the overall quality of the portfolio and its income-generating potential. Our increased market capitalisation at nearly R13bn, lower gearing levels and improved access to lower cost funding, all ensure Redefine International is well positioned for future growth and support sustainable and growing returns for our investors,” he said.
During the reporting period, Redefine International placed 115.1 million shares to raise £54.7 million and strengthened its balance sheet with pro forma group loan-to-value reduced to 53 percent from 60.4 percent at the start of the period, and a continuing programme of early debt extensions.
The company disposed of properties for £29.4m at an average premium to book value of 23.8 percent and the proceeds will be used to acquire strategic new assets.
Watters said the company was looking at disposing of further properties for between £15m and £30m, largely regional offices and some smaller shopping centres in the UK.
He said the company had targeted growth for its UK hotel portfolio as an effective way of increasing exposure to assets that were expected to outperform over the medium term.
Watters admitted there were hotel investment opportunities in Germany and perhaps in Switzerland.
During the reporting period, the company finalised the acquisition of Weston Favell Shopping Centre for £84m and after the close of the period acquired the remaining 40 percent of Earls Court Holiday Inn Express for £6.3m.
Watters said investors could expect more positive performance from the company.
The property company’s share price dropped 2.65 percent to close at R9.92 on the JSE on Wednesday.