Redefine Properties today reported distribution growth of 7.2% on a like-for-like recurring income basis, meeting its forecast to investors for the year ended 31 August 2012. The total return to unitholders was 30% for the year.
Marc Wainer, CEO of Redefine, attributes this solid performance to Redefine’s successful strategy which improved the quality of its local property portfolio, produced good core income growth, reduced funding costs and delivered management efficiencies through firm cost controls.
“Our continued pursuit of revenue enhancing opportunities, combined with the strategic programme to increase the overall quality of our core property assets, contributed positively to Redefine’s results,” says Wainer.
Despite ongoing challenging market conditions, affecting office properties in particular, Wainer notes Redefine’s core property portfolio is anticipated to show continued improvement due to the strategic shift in the quality of its assets. “Distributable income is anticipated to grow between 5.5 per cent and 7.0 per cent in the coming year,” says Wainer.
JSE-listed Redefine is a property loan stock company managing a diversified portfolio of property assets of over R39 billion. The company’s local investment assets comprise 253 properties valued at R21,1 billion and a R5,6 billion portfolio of strategic listed property securities. Effective August 2012, Redefine acquired the Fountainhead Property Trust Manco for R684,5 million.
Redefine is internationally diversified through its direct interest in ASX-listed Cromwell Property Group and JSE-listed Redefine Properties International Limited, which has a 71,7% stake in LSE-listed subsidiary Redefine International PLC.
Benefiting from its first full year of local internal property management, as well as increased efficiencies, Redefine’s operating cost ratio improved by a noteworthy 2,8% to 23,7% of contractual rental income.
“We made excellent progress improving the quality of the core property portfolio. Redefine’s average value per property grew from R50 million to R80 million,” says Wainer. This was achieved with an intense programme of strategic acquisitions, prudent disposals and value-enhancing development and redevelopment. It also helped improve vacancies in lettable space by 1,1% to 5,8%.
Furthermore Wainer notes: “Group fee and trading income, as a percentage of total revenue, has reduced to 7,3% improving the quality of Redefine’s income.”
With its annual results, Redefine also announced a highlight of this programme. Redefine’s R2,23 billion purchase offer for the 62,446m2 super-regional East Rand Mall in Boksburg, Gauteng, has been accepted by Sanlam, subject to conditions normal for acquisitions of this nature. Redefine has also agreed to the acquisition of a 50% undivided share in East Rand Mall by Vukile Property Fund, at the same terms and conditions as Redefine’s offer.
Reducing its cost of borrowings by 70bps by broadening its sources of funding, Redefine successfully debuted in the local debt capital market in September 2011 with 90-day Commercial Paper and, as part of the debt capital market roll out plan, issued a R500 million three-year bond in March 2012.
“We will continue to identify and pursue revenue enhancing opportunities which further Redefine’s strategies and provide sustainable and growing income for Redefine’s investors,” says Wainer.