Following the successful implementation of a corporate restructure, JSE-listed real estate investment trust (Reit) Liberty Two Degrees (L2D) reported a distribution a share of 60c for the year ended December 31, 2018, compared with the distribution a share of 59.2c for the prior financial year.
The company had a trading density growth of 2.9% and stated a vacancy rate of 3.4% in its portfolio.
In November, L2D converted to a corporate Reit and listed as L2D, now including 2 Degrees Properties – an operating subsidiary – and Stanlib Reit Fund Managers – a previous management company.
At year-end, L2D’s South African property portfolio was valued at R10.15-billion, compared with R8.71-billion in 2017.
L2D reported a net property income of R589-million for the reporting period, compared with R429-million in 2017, after taking into account additional assets acquired and asset management income.
The conversion to a corporate Reit was considered to be a common control transaction in that the parent company before and after the transaction was Liberty Holdings. The businesses under common control that are combined in L2D have single management and oversight and, accordingly, capital reorganisation accounting was considered to be the most appropriate treatment for the transaction.
“The quality of the L2D portfolio drove positive growth despite a difficult trading environment in South Africa. Demand for retail space in the portfolio was strong, with reduced vacancies and was supported by an improved tenant mix in the space previously occupied by Stuttafords.
“The uncertainty around the Edcon restructuring at the time of reporting the results made it difficult to accurately determine distributions and valuations in the near term,” L2D stated.
The company forecasts full-year distribution growth between 0% and 2% for 2019.