File picture: James White
File picture: James White

Resilient Reit back in the black, waiting for manipulation investigation

By Edward West Time of article published Aug 19, 2019

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CAPE TOWN - Resilient Reit went back into profit in the year to June 30, as it awaits the outcome of a Financial Services Conduct Authority investigation of market manipulation in the company.

The group reported a R4.5billion profit for the year versus a R3.3bn loss in 2018.

Resilient owns 28 retail centres in South Africa and three retail centres in Nigeria.

The share traded 1.35percent higher at R59.30 late Friday afternoon before closing at R60.27.

Revenue of R3.8bn was little changed. A dividend of 267.4cents per share was declared for the six months to June 30, bringing the total to 531.06c for the year, versus 56.44c in 2018.

The year-on-year dividends are not comparable, as the distribution of Fortress B shares to Resilient shareholders went back into profit in the year. If the effect of this distribution was eliminated, the dividend for 2019 increased by 3.3percent.

Loan to value was lower at 26.8percent versus 30.1percent in 2018.

Resilient management said the operational performance of the portfolio was sound, with the South African portfolio recording sales growth of 5percent and net property income growth of 5.1percent on a comparable basis.

Its retail centres exposed to commodities benefited from firmer markets for some resources; retail centres exposed to government spending, including social spending, also performed well; and of those in metropolitan areas of Gauteng, three recorded negative sales growth. Jones Lang LaSalle revalued the South African property portfolio upwards by 2percent. Resilient’s share of the South African vacancy was 1.8percent at June.

The 50percent-owned Mams Mall, which was 10.9percent vacant at December 2018, was 4.5percent vacant at year-end.

Vacancies in the Nigerian portfolio increased to 8.1percent at year-end due to the eviction of a national furniture retailer that was in arrears. This space is being reconfigured into smaller units and was expected to be let at higher rentals.

A board decision not to distribute the 40.9percent basic rental from Edgars, Edgars Beauty, Mac and Jet stores would reduce distribution for the 2020 financial year by about R44million.

Resilient expected its distribution to increase by about 5percent in the next financial year, if there was no further deterioration in the economy or major corporate failure, and that tenants would be able to absorb rising utility costs and municipal rates.

The company said a special committee was established in September following receipt of a letter of allegations signed by 10 institutions. The committee met nine times during the year in addition to hosting separate meetings with 16 stakeholders.

During these meetings, all parties were requested to provide more information on the allegations.


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