Landlord Redefine braces for more Covid-19 turmoil
The country’s second-largest landlord Redefine, which swung into a record loss of R6.4bn, is bracing for further economic turmoil from the global coronavirus pandemic.
The group, which also operates in Poland, the UK and Australia, attributed the loss in the six months to February to writedowns on the values of its international assets.
Redefine is preparing for more economic pain as governments in its major markets such as SA only rolled out lockdown measures at the beginning of its second half, which ends in August.
As part of efforts to ride out the economic crisis, the company with R89.2bn worth of property assets scrapped dividend payouts in the first half and refrained from making any promises about full-year payments.
“At this stage we are not providing a forecast for our distribution,” CEO Andrew Konig said.
Konig also said this was mainly due to the need to be prudent when recognising offshore dividend streams in the face of the lockdown and global volatility.
Redefine announced a 32% fall in its distributable income per share for the reporting period to 33.46c.
Real estate investment trusts (Reits) are supposed to pay a minimum of 75% of their distributable income as dividends for their full financial year so they can act as incomefocused stocks. But SA’s Reits have requested the JSE to allow this stipulation to be put on hold in 2020.
COO David Rice said Redefine would focus during the rest of 2020 on retaining tenants and keeping its vacancy level relatively low at 6%.
The group, whose local portfolio had a tenant retention ratio of 96%, would look at tenants’ challenges on a case-by-case basis. He said there had to be an emphasis on helping small and medium-sized tenants who were in need of rental relief.
Its directly owned local portfolio is worth R71.3bn and it owns R5.9bn worth of international property directly.
It also has R12bn worth of investments in other property companies, including Polish company EPP NV, British group RDI Reit and Australian group Cromwell Property.
The accounting loss of R6.4bn, which was a wild swing from a profit of R2.4bn previously, represents about 49% of its R13.1bn market capitalisation, which has already been pummelled by market uncertainty and an economy deep in recession.
Redefine’s share price closed 7.05% lower on Monday at R2.11, down 70% year to date.
Over the same period of time, the JSE’s property index has fallen 53.72%.
In the first half, Redefine had not earned any income from its offshore investments, its financial director Leon Kok said.
The carrying amount of EPP, of which Redefine owns 45.4%, was impaired by R442.4m, and the carrying amount of RDI Reit, of which Redefine owns 29.4%, was impaired by R121.5m.
Constrained local economic conditions and a lack of catalysts for a recovery meant Redefine had to impair its goodwill and other intangible assets by R5.6bn.
Goodwill refers to the established reputation of a business, which is calculated as part of its value should it be sold.
THE COMPANY SCRAPPED DIVIDEND PAYOUTS IN THE FIRST HALF AND REFRAINED FROM MAKING ANY PROMISES ABOUT FULL-YEAR PAYMENTS