Durban - Redefine International, the FTSE 250 income-focused UK-based property group, wants to capitalise on the positive growth prospects coming out of the UK and the rest of Europe. The company said that the UK economy had proven more resilient since the June 2016 EU referendum than was widely anticipated, with growth forecasts recently revised upwards to 2 percent for 2017.
“Unemployment has remained low and recent growth appears to be widespread across most regions,” the group said. “Notwithstanding this, the UK faces a number of uncertainties, including an imminent general election and the subsequent Brexit negotiations, as well as rising inflation.”
Redefine said its outlook remained optimistic for the years ahead and that the recently proposed acquisition in Germany at the beginning of the month had the potential to propel the company even further in the German property market. The planned transaction received shareholder approval in an extraordinary general meeting held on Wednesday, getting 99.75percent of the vote.
The group said now that the transaction received overwhelming support, it would move ahead with increasing its stake in German Leopard Portfolio from the existing 50 percent equity interest.
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It said the transaction would cost 49.4 million euros (R709.43 million), adding that the German economy appeared stable with modest growth and one of the lowest unemployment rates in Europe at 4.3 percent.
Redefine said prime yields in Germany’s core markets could be below their last peak, but continuing scarcity of investment product and strong investment demand, particularly for prime assets, suggested ongoing support for valuations.
Chief executive Mike Watters said: “Our diversified portfolio, which includes a 21 percent weighting to Germany (25 percent following the German supermarket portfolio acquisition) and no direct exposure to the financial services markets in London, gives us relative confidence in our outlook.”
In the half-year results the group reported that underlying earnings increased by 13 percent to £24.3 million (R410.45 million) to end February, up from £21.5 million.
The group attributed the increase to the full period impact of the AUK acquisition, the second tranche of which was completed in March last year.
The board declared an interim dividend of 1.3 pence per share on earnings of 1.35p per share.
“The disposals achieved during the period, in addition to the selective reinvestment of proceeds, illustrate our commitment to improving the overall quality of the portfolio. With optimism in the long-term outlook of the markets we operate in, we remain committed to driving Redefine International forward to cement the company’s position as the UK’s leading income-focused diversified Reit,” said Watters.
Group chairperson Greg Clarke said he was equally pleased with the progress made. “Against an uncertain backdrop, Redefine International has delivered a solid performance underpinned by a strategy which is expected to deliver a much stronger company, portfolio and capital structure for the benefit of shareholders over the long-term,” he said.
Redefine shares dropped 0.36 percent on the JSE to close at R10.92 on Wednesday, valuing the company at R60.85 billion.