International News

Burstone Group’s solid operational performance bolsters FY24 results

Andrew Wooler, CEO of Burstone Group.

Burstone Group has published its FY2024 results, reporting an increase of 7.4% in its distributable earnings per share with its full year distribution by share increasing by 1% to 105.67 cents per share (March 2023: 104.64 cents per share).

Burstone says these results are underpinned by solid operational performances from its South African and European businesses with like-for-like net operating income (NOI) up 1.5% and 6.2% (in Euros) respectively. However, the results were negatively impacted with an increase in interest rates resulting in a c.R66 million increase in funding costs during the period.

During the year, Burstone delivered on several of its strategic initiatives, and it is already benefitting from synergies created by the internalisation and integration of its business as well as its enhanced international footprint.

The Group’s annualised net management fee saving, which resulted from its internalisation, was R80 million (8% higher than forecast at the time of the transaction). It also completed its rebranding across South Africa and Europe as the Burstone Group.

Burstone delivered on several cost saving initiatives including c.€2.1 million corporate savings in Europe with further synergies expected during FY2025. It has also adopted a new management mandate to manage a c.€170 million portfolio in Germany with the opportunity to co-invest in the future.

As we’ve transitioned into a fully integrated international real estate business, our team has delivered on what we set out to do. Despite the challenging operating environment, our regional operations have performed well, reporting pleasing operational results. We are already seeing benefits of the internalisation and we believe our new structure has set us up to deliver on our capital light strategy and to further expand our fund management strategies across all regions,” comments Andrew Wooler, CEO of the Burstone Group.

The Group’s balance sheet remains robust with its proactive approach to managing its refinancing and interest rate risk. De-gearing remains a core focus in the near term with a forecast reduction in its loan-to-value (LTV) ratio from 44% to between 37% and 40% within the next twelve months.

Burstone sold c.R1.3 billion of its South African assets over the past financial year at a 1.5% premium to book. It has identified a further c.R1.2 billion to R1.4 billion of assets for sale in South Africa (with R400 million already under contract).

The Group is pursuing a pipeline of European asset sales of c.€150 million to €250 million with c. €90 million under offer – and at a pricing in line with book values.

We believe in disciplined capital allocation and continued capital rotation to meet risk-adjusted targets. We seek to deploy capital into the best international/local opportunities that will support our longer-term strategic plan and continue to create shareholder value. We remain focused on internally generating capital through select asset disposals to support our planned reduction in LTV from 37% to 40% over the next 12 months. We are confident that we can execute on this disposal plan. We will consistently invest for the future whilst continuing to create internal capital,” says Wooler.

The Board has resolved to apply a payout ratio of 75% for the six months ending 31 March 2024 declaring a dividend of 40.95 cents per share (March 2023: 48.32 cents per share).

The payout ratio was 95% for the first six months of the year, resulting in the total dividend payout ratio for FY24 of 85%, and a full-year dividend of 89.46 cents per share (March 2023: 99.41cents per share).

The Group will apply a 75% payout ratio going forward and will continue to assess the appropriateness of this payout policy considering the Group’s long-term strategy and after considering its LTV position, capex funding requirements and any potential taxation impacts.