Heriot REIT has posted its financial results for the year ended June 2024, announcing its acquisition of Thibault.
The company has entered into an exchange agreement with Thibault and its shareholders for the acquisition of all issued shares (103,009,878), equating to an exchange ratio of 62 new Heriot shares for every 100 Thibault shares in issue, a 62% swap ratio.
Thibault also owns 21.5% in Texton Property Fund and 10% in Safari Investments.
Heriot also continued its strategic interest in Safari Investment with its stake in the property investment company increasing from 46.5% to 59.2% through the acquisition of 5,470,088 Safari shares at a cost of R30.7 million and a further 25,952,710 shares in Safari due to the Thibault acquisition. As at the 30th of June 2024, Heriot owned 151,349,878 Safari shares.
The company says its results for the year ended 30th June 2024 were primarily impacted by the high-interest rate environment, its increased stake in Safari Investments, its acquisition of Thibault and the underperformance of its aparthotels relative to management expectations.
Heriot’s distributable earnings of R308.75 million declared for the reporting period were 13.7% ahead of distributable earnings of R271.55 million in 2023 mainly due to the inclusion of Thibault’s R37.2 million dividend declared to Heriot as a non-IFRS® Accounting Standards adjustment in its distributable earnings to 30th June 2024. Excluding the dividend from Thibault, the Group’s distributable earnings were ‘flat’ compared to the previous year.
Heriot’s distribution per share of 106.69 cents was 0.3% ahead of the 106.33 cents for the comparable period in 2023.
The Group obtained control of Safari in late March 2023 and consolidated Safari’s statement of financial position for the year ended March 2023 in its results for the year ended June 2023. As a result of including Safari’s income statement for the 15 months ended June 2024, and the increase in property valuations in the current reporting period, net operating income and headline earnings grew by 103.10% and 11.5% respectively. Basic earnings per share reduced by 31.10%. Heriot’s asset base increased by 28% due to the Thibault acquisition.
Excluding Safari, net operating income grew by 4.7%, led by the strong performance of its retail and industrial assets. An expected credit loss (ECL) provision of R7.5 million was raised against arrears arising from the early termination of an industrial lease and the full effect of the 350-basis point interest rate increased impacted net operating income growth during the reporting period.
Heriot’s Board declared a final dividend of 56.81 cents per share for the six-month period ending June 2024, a 100% payout ratio with its net asset value (NAV) per share increasing by 15.1% from R15.23 as at 30th June 2023 to R17.53 as at June 2024.
The Group’s loan-to-value ratio currently sits at 42.06% (FY2023: 41.09%).
