Redefine International Lifts Distributable Earnings By 6.6%

Posted On Tuesday, 30 October 2012 14:12 Published by eProp@News
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Redefine Properties International Limited (RIN), the JSE listed holding company of Redefine International P.L.C. (“RI PLC”), today announced its annual results for the year ended 31 August 2012. 

Mike Watters

Financial Highlights for the Group include:
• Earnings available for distribution of £18.2 million (31 August 2011: £14.6 million), an increase of 24.7%
• Distribution of 2.29 pence per linked unit for the six-month period ended 31 August 2012, an increase of 9.6% over the interim distribution
• Total distribution of 4.38 pence per linked unit for the year (31 August 2011: 4.11 pence), an increase of 6.6%
• Headline earnings per linked unit of 7.23 pence (31 August 2011: 6.35 pence), an increase of 13.9%
• Adjusted net asset value of 36.20 pence per linked unit (31 August 2011: 44.50 pence), a decrease of 18.7%

Operational Highlights include:

• Successful restructuring or repayment of over £250 million of legacy financing facilities
• Full integration of Redefine International and Wichford businesses completed
• Strong operating performance from Cromwell and the Hotel portfolio
• Leases on the Malthurst portfolio (petrol filling stations) re-geared to 2025, extending the lease term for an additional five years
• Full planning approval received for 287 residential units at Lyon and Equitable House, Harrow
• Sale of the Group's 94% shareholding in the Justice Centre in Halle, Germany
• Pro rata offer to raise £75.0 million completed post year end

Gavin Tipper RIN chairman comments, "The Group has made significant progress towards achieving its strategic objectives despite a challenging year for RI PLC, the Company's LSE-listed subsidiary.

The reverse acquisition of Wichford exposed RI PLC to a high level of short-term debt in the context of a UK banking industry that is largely closed to new real estate lending. In this constrained environment the Group was able to restructure or repay more than £250 million of legacy financing facilities, significantly improving its financial position.

The capital raisings undertaken by both RIN and RI PLC post year end were extremely successful and further boosted the Group's balance sheet, enabling it to reduce levels of gearing. The RI PLC firm placing and open offer concluded on 9 October 2012 and raised £127.5 million before costs, well in excess of the initial target of £100 million. RIN raised just over R1 billion (£75 million) through the issue of 218 141 257 new linked units at a price of R4.60 each in terms of the pro rata offer.

The pro rata offer was partially underwritten by Redefine Properties Limited ("Redefine") but given the demand for new RIN linked units and in order to broaden the RIN linked unitholder base, Redefine made available a portion of the RIN linked units taken up by it under the pro rata offer for placement with third party placees. This resulted in Redefine's beneficial interest in RIN decreasing to 49.34% following the capital raise.

RIN can now look forward with confidence to meeting its objective of being a leading diversified mid-cap cash flow focused property group, that provides hard currency income returns to unitholders.

Earnings available for distribution by RI PLC for the year were 4.38 pence per share. In a period in which there were significant challenges for the UK retail and regional office environment and austerity measures throughout the Eurozone and the UK, it is particularly pleasing to have achieved a strong operating and income performance.

The Group's adjusted net asset value ("NAV") comprises the IFRS net asset value adjusted for, inter alia, the negative equity associated with certain non-recourse financing facilities, principally the Delta, Gamma and VBG portfolios. The restructurings of both the Delta and VBG portfolios were concluded post year end. The adjusted NAV at 31 August 2012 was 36.20 pence per share, down 16.0% from 29 February 2012. NAV per share, excluding deferred tax and derivatives, decreased to 21.21 pence (36.33 pence at 29 February 2012). The decrease was largely as a result of significant declines in the values of regional offices across the UK, which impacted our former Wichford properties.

The performance of the portfolio varied substantially across our business segments. Overall, occupancy and income returns were stable despite tough trading conditions, particularly for UK Retail. In a market with such divergent performances, the benefit of having diversified sources of income with strong covenants has been demonstrated.

The Hotel portfolio performed strongly in a year that included both the Queen's Diamond Jubilee and the Olympics. The underlying hotel properties benefited from near full occupancy over the Olympic and Paralympic period and demand has remained robust post the Olympics, which is encouraging.

Our investment in Cromwell remains an important part of the business and we are confident that the quality of the underlying portfolio and recent investments will continue to provide strong income returns for our shareholders.

Following the successful capital raisings, the Group can now shift its focus from restructuring the balance sheet to enhancing and growing the property portfolio. It is in a strong position to take advantage of distressed property offerings and banks being forced to dispose of assets to reduce leverage. It will continue to engage with regulatory authorities to agree a simplified ownership and listing structure in place of the current complicated and somewhat unwieldy structure.

Significant changes to the UK REIT legislation were enacted in July 2012, paving the way for RI PLC to convert to a UK REIT. We are also led to believe that the SA REIT legislation is imminent. The Group is, in consultation with its tax advisers, reviewing the possibility of conversion to either a UK REIT or SA REIT and further announcements will be made in due course."

Mike Watters, CEO of Redefine International concludes, "We are very pleased that we have met all the targets that we have set ourselves and now look forward to delivering superior shareholder returns."

Last modified on Friday, 18 April 2014 14:27

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