Liberty Two Degrees declares first full year distribution

Amelia Beattie, CEO of Liberty Two Degrees.
Amelia Beattie, CEO of Liberty Two Degrees.
  • Full year distribution of 59,22 cents per unit.
  • Net asset value per unit increased to R9.86.
  • Arrears decreased to 4.6%.
  • Capital deployed into 95% direct property investments.
  • Improvement in trading environment.

Liberty Two Degrees has announced its first full year results for the 31st of December 2017 period. The company has declared a full year distribution of 59.22 cents per unit. Net asset value per unit grew to R9.86 as a result of good leasing progress and arrears decreased to 4.6% despite challenging trading conditions. 

Our first year since listing was marked by numerous operational accomplishments as well as some headwinds, which included a challenging macroeconomic and political environment, the impact of the PUT option exercised by Liberty, the closure of Stuttafords and Eastgate Shopping Centre’s municipal valuation increase, all of which had an impact on our distribution” comments Amelia Beattie, CEO of Liberty Two Degrees.

The company began trading as a REIT on the JSE on 6 December 2016. It manages a R8.71 billion (FY2016: R6.06 billion) portfolio of predominantly retail focused assets, reflecting an increase of R2.65 billion following the conclusion on 1 July 2017 of the acquisition of a further c.9% of the Liberty Property Portfolio for R2.51 billion.

Liberty Two Degrees will continue to focus on quality opportunities in South Africa and seek to maintain industry leading operational metrics as well as prudent balance sheet management to support future growth and returns.

The management team continues to focus on the future proofing and growth of the portfolio whilst ensuring that the company benefits from its proven track record, industry expertise and expert knowledge of the portfolio of assets.

Following the decision by Liberty Group to exercise the PUT option in June 2017, our shareholding in the co-owned Liberty Property Portfolio increased from 22% to 31%. Our active asset management measures proved successful with the Stuttafords space now mostly let, offering a variety of high quality brands to our customers when the new stores open in due course. Good letting activities which positively impacted on the trading environment as well as increased dwell times, set the platform for the fourth quarter of 2017, surprising on the upside. The portfolio trading density for the fourth quarter grew by 5.1% compared to the corresponding quarter in 2016,” said Beattie.

The total retail vacancies as at 31 December 2017 were 4.3%, which included the Stuttafords vacancy of 3,1% which reflects the quality of leasing in the retail portfolio. With the office vacancy at 10.3%, the overall vacancy rate is 6.4%. Despite the economic pressures endured by many businesses in 2017, leases covering 67 631m2 were renewed during the year and a further 41 078m2 in new tenant deals were concluded across the portfolio.

L2D’s balance sheet is well positioned to take on gearing. It is management’s strategic intent to use the capacity to fund future quality acquisitions in line with our strategy … The strong operational performance of our existing portfolio is evident in the rental income growth achieved, the attraction of new tenants and the implementation of new and innovative technologies to establish premium lifestyle and leisure destinations,” commented Liberty Tow Degree’s Financial Director, José Snyders.

The company is underpinned by strong corporate governance, which promotes the long-term interests of its unitholders, employees and other stakeholders and ensures management accountability. The company has also made good strides in its commitment to transformation with 65% black representation, of which 53% of that is black female representation.

Post year end L2D strengthened its management team, appointing Jonathan Sinden as Chief Operations Officer effective 15 February 2018. He is a Quantity Surveyor with 20 years’ experience in the property industry. Prior to occupying his new position, Sinden served his tenure as the Asset Management Executive for Sandton City precinct for the last four years. His wealth of experience and strong technical and retail expertise is an asset to the business.

We continue to believe strongly in our South Africa strategy. Despite the challenges impacting the business in 2017 we are on track to deliver net property income growth of between 7 and 9% in 2018, supported by the emergence of an improved trading environment in the second half of 2017. Our robust property portfolio is well positioned to show continued improvement,” concluded Beattie.