Redefine eyes overseas markets in UK & Australia for better yields

Posted On Thursday, 17 December 2009 02:00 Published by eProp Commercial Property News
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SA’s second-largest listed property group, Redefine Properties, is eyeing the European and Australian property markets from next year and plans to raise capital for acquisitions in these markets.

Mike FlaxWith its plans to enter the UK and Australia, Redefine will be following the footsteps of its rival, Growthpoint, the largest listed property group on the JSE, which entered the Australian market this year.

Executive director Mike Flax said this week that the group was on the lookout for opportunities in Europe, especially the UK, for acquisitions.

“We want exposure in Europe and Australia because yields there are better,” Flax said.

“We are finalising an acquisition of a property fund in the UK and we will change its name to Redefine International.” This would give Redefine international exposure and the group was planning to invest a further £30m into Redefine International, which will have a dual listing on the JSE and the London Stock Exchange (LSE).

Flax said the group would probably invest a further £100m in Redefine International, in which it holds a 55% stake.

Redefine, ApexHi Properties and Madison Property Fund merged into one entity called Redefine in August. Aside from boosting its position in the sector to number two, the merger also made Redefine the second local property share after Growthpoint to make it on to the JSE’s top 40 index.

Flax predicted that Redefine would raise distributions by 15% 20% next year, not as result of improving trading conditions in the property market but because of benefits of the merger with Madison and ApexHi.

“I think most companies will find it difficult to produce double-digit returns next year.

“Property watchers predicting significantly improved conditions in 2010 are by and large unrealistic,” Flax said. SA was following the rest of the world out of the recession, he said, but pointed out that the property cycle traditionally lagged a year behind the general economy.

“The first year in which conditions start improving can often be as difficult for the property sector as the recession.”

Redefine plans to reduce its number of properties from more than 400, in a bid to raise the average property value to R100m from R40m. Flax said one advantage of the new policy was that it would enable Redefine’s asset managers to give more time and better service to the properties and tenants that they continue to manage.

Flax, who has been given control of the new strategy, said the group would sell about 40% of the properties in the portfolio, though in value terms this would represent less than 20%. The properties often had multiple tenants and many lacked the potential to be transformed.

Redefine also planned to buy new blue-chip, higher-profile stock and would continue refurbishing, upgrading or extending current stock.

Redefine appears on the Global Property Research 250 index, joining nine other South African companies on the list.

The index is a free-float weighted index that tracks the performance of the 250 leading and most liquid property companies worldwide.

Companies are selected on the dollar trade volume of the share in the past 12 months.

Only companies with a free-float market capitilisation of more than $50m and free-float percentage of at least 15% are eligible.



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