RDC properties on expansion mode
While most companies were largely affected by the outbreak of Covid- 19, RDC properties Group Chairman, Guido Giachetti said the group continues to diversify its portfolio despite the negative impacts of the pandemic. He said the group is considering various cross- border acquisitions, which after the conclusion of negotiations and the successful fulfilment of all conditions, will contribute positively to the company in the future.
“The acquisitions are intended to enhance the existing portfolio and are a continuation of the Company’s strategy of portfolio and geographic diversification, ” Last year, the group’s property portfolio increased in total value by 13.6 percent to P22.3 billion through acquisitions, with Botswana representing 62 percent and South Africa representing 32 percent. Giachetti said the group has shown resilience of a diversified and carefully managed portfolio in a difficult trading environment.
“The purpose of our regional and sectorial spread becomes apparent through the strong performance of our USA investments and that of the Capitalgro portfolio in Cape Town which has been underpinned by a reduction in lending rates and has collectively contributed to a satisfactory outcome in the circumstances.”
Writing in the group’s 2020 annual report, Giachetti said the speed at which the vaccine has been developed has created optimism for a return to a more normal life.
“As a result, we can expect an increase in travel and we believe our strategy of a diversified portfolio by sector, region and currency jurisdiction, positions the group well for the immediate future,” he said.
In its year ended December 2020, the group’s rental revenue declined by 13.7 percent to P131.6m, of which 55 percent was receipted in Botswana and 45 percent in South Africa.
The decrease in revenue was a combination of the impact of COVID- 19 on the hospitality business where revenue decreased by P28.4m, and the rental deferment/ rebate packages agreed with commercial and retail tenants.
This was partially offset by lower lending rates and the new acquisition’s strong cash flows, notably in Capitalgro, which resulted in a P6.8m increase. Finance costs are on aggregate higher by P9.6m due to the costs to fund the Radisson RED project.
The group currently operates in six countries including Botswana ( 22 properties), South Africa ( 7 properties, 2 active projects), Mozambique ( 1property and 1 active project, 1 committed acquisition), Madagascar ( 1 property), USA ( 1property investment, 1 Development investment) and Namibia ( 3 dormant projects).
For his part, CapitalGro Chairman said the addition of the two new properties to the portfolio during 2020 assisted to mitigate the Covid- 19 impact due to their strong cashflows, and has diversified the company’s revenue base. Voortrekker Road, acquired at a total cost of R174.0min March, was revalued externally at R181.0m, and Caxton Street, acquired in May at a cost of R86.0 million, held its value at year end.
“The risk of negative rental reversions and increased vacancies remains very real as the over- supply of commercial space continues.
We have used this period to consider each of our properties strategically as it relates to their future use. The year ahead will see continuation of an internal focus as we concentrate on protecting shareholder value and distributions whilst carefully monitoring the market. We do expect to identify opportunities arising from this current crisis and will prudently assess same for synergies and alignment to the Capitalgro portfolio.”