JSE-listed Redefine Properties, which posted 7.5% distribution growth to 4.82c a share for the six months to February 28, on Monday said it was “well-poised to weather the coming storm” owing to its diversified asset platform.
During a media briefing, CEO Andrew Konig outlined that the real estate investment trust (Reit) had a number of high-return investments in its pipeline, where value can be unlocked in future.
This included its Respublica student housing developments – in Hatfield Square, Pretoria, which comprised 635 beds and in Yale Village, with 330 beds leased to Wits – and focusing on expanding its solar photovoltaic footprint, while exploiting non-gross lettable area (GLA) income opportunities.
Meanwhile, Konig said that, while the Reit would not continue focusing on its assets on the continent outside South Africa, geographical diversification remained important to access stable revenue flows to broaden its funding resources.
The company identified its 11.8% interest in Pan-African property income fund Mara Delta and its 37.1% share in Nigeria-based Oando Wings as possible recycling opportunities, which could boost its balance sheet. “Africa is a region that just does not meet Redefine’s investment criteria,” he added.
The Reit broadened its international exposure through the expansion into student accommodation in Australia during the period under review.
This saw the company acquire a 90% equity investment in Journal Student Accommodation Fund, in Melbourne, for R337.9-million. The site currently has development approval for 804 beds, with total investment estimated at R1.2-billion. Development is set to start in June.
Redefine also boasted a 24.8% uptick in distributable income, to R2.3-billion, grew its core portfolio operating income by 5.9% and maintained sound credit metrics. This was paired with a strong tenant retention in GLA of 86%, up from 83% in the prior year, with overall portfolio occupancy of 94.5%.
“We have [also] refinanced a significant portion of our international debt over the period at competitive rates, which has been a significant achievement, Konig noted, adding that the company’s debt was currently hedged at 83%.
However, he pointed out that increased political uncertainty and ongoing ratings downgrades were worrying. “As long as [ratings agency] Moody’s keeps the ratings grade of South Africa Incorporated above investment grade, so Redefine will be. Unfortunately - the watermark - if that resets, so will we,” he noted.