Des de Beer, CEO of Resilient REIT, has announced his retirement from the company at the end of 2023. He will remain on the board as a non-independent, non-executive director. Johann Kriek, executive director, and Head of Retail has been appointed by the board as CEO elect.
The REIT published its interim results for the six months ended June 2023, declaring a dividend of 203.22 cents per share (2H2022: 203.98 cents per share) and below the 234.05 cents per share declared for H12022 due to higher interest rates and lower distributions from investee companies.
During the period, Resilient sold its 58 568 486 shares in UK-based Hammerson at an average price of R6.08 per share raising proceeds of R356 million. A further 103 863 163 shares were sold for R626 million (at an average price of R6.03 per share) after the reporting period. While Hammerson’s results were well received by the market, Resilient’s board’s “priority remains focused on its energy initiatives and funding its capital commitments while retaining conservative leverage.”
Hammerson did not declare a dividend in respect of 2H2022 and its dividend in respect of H12023 was based on a payout ratio of 65% of its adjusted earnings – below industry best practice of at least 85% and impacted Resilient’s distribution on its holding as well as through its investment in Lighthouse Properties.
Growth in comparable sales have improved from the 2.9% reported for the four months to April 2023 to 3.6% for the six months ended June 2023. Foot traffic in Resilient’s centres increased by 6.3%. On a rolling twelve-month basis, comparable sales increased by 6.4% until June 2023. Its local portfolio recorded comparable net property income (NPI) growth of 5.8% for the reporting period. Its NPI was impacted by Resilient’s pro rata share of the unrecoverable cost of diesel and generator servicing costs of R9.1 million and R2.2 million respectively (1H2022: R1.4 million and R0.5 million respectively).
Tenants remaining in occupation renewed expiring leases at rentals on an average 5.1% higher than under the expired leases. Leases concluded with new tenants were on average 30.8% higher than the rentals of the outgoing tenants. In total, rentals for renewals and new leases increased on average by 9.6%.
Resilient owns 27 retail centres with a gross lettable area (GLA) of 1.2 million square metres. Its pro rata share of the vacancy in the portfolio was 1.9% at June 2023 which includes vacancies created to facilitate the introduction of new tenants at Tzaneng Mall and Jabulani Mall.
Resilient owns a 40% interest in Retail Property Investments SAS in partnership with Lighthouse Properties. RPI is the owner of four regional malls in France.
The country has been negatively impacted by tenant failures and receiverships, accelerated by the state ceasing its Covid-19 related financial support. A number of national tenants did not recover from the pandemic and most of these businesses had private equity capital structures.
Administrative procedures in France are challenging resulting in delays of up to twelve months to recover the space from failing tenants. Good progress has been made with re-letting this space to international retailers.
The full year impact of the tenant failures and administrative delays is forecast to be approximately €0.5 million (Resilient’s share) for 2023.
The company’s loan-to-value (LTV) currently sits at 34.9% considering the proceeds of R626 million from the disposal of its Hammerson shares since the reporting date.