CAPE TOWN – RDI, the income-focused UK Real Estate Investment Trust with a secondary JSE listing, had achieved a high number of new lettings in the first quarter of its financial year, while the disposal of non-core assets continued.
Chief executive Michael Watters said in an update yesterday that their asset management team had delivered a number of letting successes.
Within the non-core portfolio, progress was being made in selling assets identified for sale, to reduce leverage and re-weight the portfolio.
The share price was up 0.37 percent to R24.64 on the JSE early Monday afternoon, before closing at R24.78.
“Sales in both the UK and Germany have been completed at premiums to the August 31, 2019, valuations,” he said.
Occupancy across the portfolio (excluding the RBH managed hotels and London serviced offices) stood at 96.9 percent as at November 30, 2019, versus 95.9 percent at August 31.
A new 15-year lease was signed with Arrival Automotive for Unit 1A of the newly developed distribution warehouse in Bicester.
Unit 1B was completed in December and was attracting healthy levels of interest, supported by the limited supply of modern distribution units along the M40 corridor, said Watters.
A rent review was agreed with Parcelforce on a distribution unit at Camino Park, Crawley.
The previous annual rental income of £0.38 million (R7.12m) has been increased to £0.60m.
Three new lease extensions had been agreed with DSG Retail across the retail parks portfolio.
The leases had been extended to new ten-year terms with the rent remaining unchanged from the previous passing rent in return for an average rent free period of 15 months.
At St George’s, Harrow, the lease with Vue Cinemas, a key tenant, had been extended for a new 20-year term with the rent remaining unchanged at £0.77m per annum.
The new lease agreement included a £2m capital contribution to refitting the cinema.
The London market for limited service hotels traded in line with expectations.
However, certain regional markets, including Edinburgh, had seen occupancy and rates come under pressure.
A similar trend had been experienced across the managed hotel portfolio, with London hotels experiencing stable trading, while same regional hotels were experiencing tougher market conditions.
The London-serviced office portfolio was performing in line with expectations.
Average occupancy at November 30, 2019, was 90.1 percent from 93.6 percent at August 31, 2019.
The disposals programme was focused on reducing retail exposure to about 20percent of the portfolio and strengthening the balance sheet with a revised loan to value target of between 30 to 40 percent.
Loan to value was 42 percent at the last financial year-end.
Leeds, Waterside, had been sold for £6.5m.
Two retail warehouse assets in Kaiserslautern and Waldkraiburg in Germany, held in joint venture were exchanged for sale on October 4, 2019.
The disposal was completed for 20.4m (R325.5m), a 9.1percent premium to the August 31 market value.