Redefine International restructuring generate positive performance

Posted On Monday, 05 May 2014 10:19 Published by
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SA shareholders of Redefine International continue to be rewarded on both the income and capital growth front.

Michael Watters

The company on Thursday declared a solid set of interim results that will see dividend payments increase by a substantial 30% in rand terms for the six months ending February.

Redefine International‚ which owns an R18bn portfolio of shopping centres‚ offices and hotels across the UK‚ Germany‚ Switzerland and Australia‚ has been the JSE's best-performing property stock over the past year. By mid-afternoon it was up 80% over 12 months despite a 3% pullback in late morning trade.

The strong recovery followed a tough two years during which debt restructuring worries‚ unfortunately timed acquisitions and the UK retail sales slump weighed on investor sentiment.

The earnings announcement yesterday is the company's first results since it started trading as a secondary inward listing on the JSE and as a UK real estate investment trust on the London Stock Exchange late last year.

Distributable earnings per share increased to 1.55p for the six months to February 28‚ up 5.1% from 1.475p a year ago. That is despite an additional 302.4-million shares in issue. Management declared a dividend of 1.5p per share‚ up 1.6% from the 1.475p a share paid in the previous interim reporting period.

Redefine International CE Mike Watters said this represented dividend growth of 30% for South African shareholders in rand terms based on yesterday's rand-sterling exchange rate. He ascribed the positive performance to the restructuring that had improved the overall quality of the portfolio‚ as well as rand weakness‚ which has boosted returns for South African investors.

Mr Watters said Redefine International's increased market capitalisation‚ which rose on the JSE from R5bn in late October to R12.5bn now‚ has placed the stock on the radar of a number of large fund managers that may not previously have held such shares due to size and liquidity concerns.

Management planned to continue to bulk up the portfolio after last year's acquisition of four major shopping centres in Germany and the UK.

Keillen Ndlovu‚ head of listed property funds at Stanlib‚ said management has moved in the right direction by simplifying the business‚ reducing the loan-to-value ratio‚ internalising the management company‚ improving and diversifying the portfolio and increasing the company's size. "All in all‚ this means that Redefine International has become more compelling to invest in."

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