Redefine International reports solid operating and financial performance

Posted On Monday, 29 April 2013 09:30 Published by Commercial Property News
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Redefine International has reported a solid operating and financial performance by London listed Redefine International which has enabled a renewed focus on enhancing the property portfolio and the long term high quality income it delivers as evidenced by the number of successful asset management initiatives and new investments completed during the past six months.

Mike Watters Redefine InternationalThe Company’s diversified portfolio has been further enhanced by the larger allocation of capital to performing sectors, resulting in both earnings and NAV growth. 

Earnings of RIN available for distribution for the six months were 1.49 pence per linked unit with headline earnings per linked unit of 2.08 pence. Given the impact of the capital raising in September and that the new investments have not contributed to earnings for the full period, this reflects a strong income performance.

The overall increase in investment values supported an increase in the NAV per linked unit to 39.19 pence, a 12.5% increase over the comparable figure post the capital raising. Leverage has been materially reduced following the capital raising and the successful restructuring of a number of debt facilities. The Group LTV of 51.2% and weighted debt maturity in excess of 8 years places the Company on a significantly stronger financial footing.

The Board of RIN has declared an interim dividend of 1.47 pence per linked unit reflecting a pay-out ratio of 98.9% of earnings available for distribution.

Summary of key operational activity
The overall performance of the Group's investment portfolio was supported by sound performances from Cromwell and the European portfolio as well as a stronger Australian Dollar and Euro against Sterling.

UK Stable Income
Exposure to UK regional offices has been significantly reduced and will continue to reduce as assets are sold as part of the Delta portfolio restructuring. In the interim there have been a number of successful lettings, maintaining occupancy and securing government-backed income returns.

UK Retail
A 0.7% increase in occupancy to 95.9%, together with the redevelopment and refurbishment initiatives being carried out at Birchwood, Warrington and St George's, Harrow supported a 1.0% increase in values to £226.3 million.

The acquisition of the Earls Court Holiday Inn Express strengthened the Hotel portfolio and complements the strategy of investing in branded London-based limited service hotels.

The European portfolio provided a resilient income contribution backed by strong covenants and inflation linked leases. An €11.6 million Investment into newly developed convenience retail assets in Germany and the sale of smaller non-core assets continues to strengthen the quality of the portfolio.

Cromwell delivered an outstanding performance which included a well-supported capital raise and improvements in key operating and financial measures. This, together with inclusion in the ASX 300 index, supported a 25.3% increase in the security price during the period. Redefine International capitalised on the strength of Cromwell's security price and Australian dollar post period end, selling 86 million shares at a weighted average price of AUD 90.1 cents, delivering £52.8 million of capital and a £12.9 million net profit. Cromwell remains a key strategic shareholding but Redefine International will take opportunities to recycle capital where opportunities exist to reinvest capital into other earnings enhancing investments.

REIT Conversion
The Board of RI PLC is currently assessing proposals to internalise the management function, convert to a UK Real Estate Investment Trust and inwardly list on the JSE which would eliminate the RIN holding structure. An announcement on timing will be made as soon as a formal decision to proceed is taken by both the RIN and RI PLC Boards.

As announced on SENS on 19 April 2013, the Board of RIN remains confident that the distribution per linked unit for the full year ended 31 August 2013 will be within the range of 3.07 to 3.29 pence.

Commenting on progress for the half year, Gavin Tipper, Chairman of RIN says, "'The capital raise was a transformational event for the Company, placing it on a firm financial footing. The shift from restructuring the legacy financing facilities and simplifying the ownership structure to enhancing the quality of the portfolio is progressing well with a number of new accretive investment opportunities being explored."

Mike Watters, CEO of Redefine International concludes, "The future is considered to be brighter than it has been for some time and the Company is looking forward to a dynamic period where it can cement its place as offering a strongly capitalised, diversified, income focused investment opportunity."

Financial Highlights for RIN in the review period were the following:

  • Distributable earnings increased by 4,4% to £9.4 million (February 2012: £9.0  million)
  • Group profit after tax attributable to equity holders of £22.3 million (February 2012: loss of £6.8 million)
  • Headline earnings per linked unit of 2.08 pence (February 2012: 2.88 pence (1))
  • An interim distribution of 1.47 pence per linked unit has been declared (February 2012: 2.09 pence (1))
  • Adjusted net asset value per linked unit of 39.19 pence (August 2012: 34.82 pence(2)), an increase of 12.5%
  • Group loan to value reduced to 51.2% (August 2012: 81.7%) and weighted debt maturity increased to 8.18 years
  • Total unitholder return for reporting period of 7.3% (15.4% for 12 months to 28 February 2013)

Group Operational Highlights for the half year include the following:

  • Investment targets met following R1 billion capital raising in October 2012
  • Restructuring of legacy Wichford assets and associated debt largely complete
  • Exceptional performance from Australian associate, Cromwell (+25% in the period)
  • Capital recycling through the sale of 27% of the Cromwell holding, at a significant profit
  • Hotel portfolio expanded through acquisition of a 60% interest in the Earls Court Holiday Inn Express and commencement of the Southwark Holiday Inn Express redevelopment; both located in central London.
  • Acquisition of newly developed properties in Kaiserslautern and Huckelhoven, Germany in joint venture with a pension fund partner
  • Asset management initiatives to improve asset base on-going
  • Occupancy stable at 95.9% notwithstanding numerous UK retail tenant failures
Last modified on Monday, 20 May 2013 09:29

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