Bulking Up The Balance Sheet

Redefine Properties’ latest results indicate that it expanded its assets by R1.9bn and has grown its Polish footprint, while scaling back in Australia.

- Glenda Williams

JSE-listed diversified real estate investment trust (REIT) Redefine Properties’ results came just days after it gave KPMG the old heave-ho, joining an already-long list of companies that have cut ties with the beleaguered auditing firm.

“We felt KPMG did not go deep enough in working through corrective measures,” explains Redefine CEO, Andrew Konig.

Posting a 5.5% increase in distribution to 47.30c/share for the interim period to 28 February and maintaining that for the full financial year might appear lacklustre, but not unexpected given the continued tough economic climate.

“It’s a good set of results,” says Naeem Tilly, investment analyst at Catalyst Fund Managers, adding that the impact of improved confidence following the appointment of Cyril Ramaphosa as president will only come through in property stock numbers in a year or so.

Still, Redefine lowered its loan-to-value (LTV) level from 41.1% to 40.1%, grew distributable income by 8.6% to R2.5bn and improved overall occupancy to 95.8%. Net asset value (NAV) also grew by 31c to R10.54.

The REIT expanded its assets by R1.9bn taking total assets to R93.4bn, with the R85.6bn property platform remaining biased towards retail at 41% of sectoral value spread. Offices comprise 37%, industrial 14%, student accommodation and specialised assets 3% and hotels 2%. Disposal of non-core assets amounted to R2.6bn, bolstering liquidity.

On the local front, which accounts for 80% of its portfolio value, lease renewals have been under pressure but despite this the REIT managed a 94.7% retention rate. But it comes at the cost of rental renewal growth.