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Redefine sells off last of government-tenanted properties

2nd May 2013

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

  

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JSE-listed property loan stock company Redefine Properties on Thursday said it was only weeks away from signing a R2.5-billion deal for the sale of most of its government-tenanted properties.

Negotiations regarding the disposal of 24 properties to an undisclosed black economic-empowerment (BEE) consortium were at an advanced stage.

The BEE group aimed to list on the JSE after combining its portfolio of acquired property assets.

The disposal brought Redefine’s exposure to government-tenanted buildings to 1%, CEO Marc Wainer said at the group’s interim financial results presentation on Thursday.

The group was close to disposing of the last of the offices of government and municipal departments and divisions, which historically accounted for 30% of Redefine’s office portfolio, as part of its largely complete restructuring.

Redefine started restructuring over 18 months ago to improve the quality of its portfolio and rid itself of noncore properties.

The group had narrowed its assets to 244 properties valued at R23-billion, but aimed to bring this down to 222 properties, with a portfolio valued at R23.7-billion, with an almost even spread of properties and gross lettable area (GLA) across office, retail and industrial.

About 64% of the investment value rested in Gauteng, with efforts by Redefine to minimise its exposure in the Eastern and Western Cape, and raise its profile further  in Gauteng.

The company’s local investment assets as at its August 2012 financial year-end comprised 253 properties valued at R21.6-billion.

During the six months to February, Redefine sold 11 noncore properties with a GLA of 36 936 m2 for a combined value of R208-million, at an average yield of 9.7%.

Agreements for the sale of several properties representing a GLA of 31 617 m2 to multiple buyers for a total of R116-million have been secured.

All disposed properties were below R60-million in value.

Redefine also bought two properties with a combined GLA of 6 750 m² during the period under review for R65-million at an initial yield of 8.6%.

The group had also agreed to buy properties with a GLA of 98 488 m2 from multiple vendors for a combined R2.5-billion, including the April acquisition of the East Rand Mall.

Redefine and Vukile Property Fund reached an agreement to buy the 62 446 m² East Rand Mall, in Boksburg, from Sanlam Life Insurance for R2.23-billion, with Vukile buying a 50% stake for R1.115-billion from Redefine.

Redefine was also in the process of acquiring Nicol Grove, a transaction that would be completed by August, as well as Durban-based Cornubia Land – 15 ha of industrial land with a 90 000 m² of potential building space.

The group’s development pipeline over the next two to three years exceeded R3.1-billion.

Redefine would invest R900-million to build Webber Wentzel Attorneys’ new headquarters in Rivonia road, Sandton. The property was expected to have a value of about R1.1-billion at completion.

Redefine would also inject R505-million into the redevelopment of a 19 343 m² Sandton-based office building, R95-million into a 14 000 m² warehouse, in Isando, and R495-million into the redevelopment of the 57 058 m² Standard Bank building, in Cape Town, besides others.

It was also developing the 80% let 64 000 m² Matlosana Mall, in Klerksdorp for R1.03-billion, which would be completed by November 2014.

Meanwhile, Redefine injected almost R5-billion for a 45.6% stake in Fountainhead Property Trust, which the group aimed to drive in a similar manner to that of its previous investment in Hyprop.

The group also increased its stake in ASX-listed Cromwell Property Group, in Australia, from 4% to 10%, and aimed to partner in the near future to ensure direct access to Australian property investment.

Through its JSE-listed associate Redefine Properties International, the group aimed to enter the German shopping centre market over the next few years.

FINANCIAL RESULTS
Redefine delivered a 7% higher distribution – at 33.7c per linked unit – during the six months to February.

The JSE-listed group achieved total revenue of R1.85-billion in the interim period under review, up from the R1.59-billion achieved in the corresponding period the year before.

Profit for the period reached R1.15-billion, compared with a loss of R1.057-billion in the prior corresponding period.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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