Well-run and rewarding
Resilient Reit has again proved that the premium at which it trades on the JSE is justified.
At a forward yield of 4.3%, versus the sector’s average of 7.5%, the company is one of the listed property sector’s priciest counters.
But management last week yet again delivered impressive earnings growth numbers, achieving a hefty 25.1% increase in the dividend payout for the year to the end of June.
That is the highest dividend growth delivered by Resilient since its listing in 2002, and way ahead of the average 6%-8% growth expected for the sector as a whole this year.
Resilient’s pleasing growth numbers were supported partly by a recent rights issue which reduced the cost of funding but also by its aggressive expansion into offshore property markets. The latter has offset the effects of the tough economic conditions to which its SA portfolio of shopping centres is exposed at present.
Resilient’s offshore focus is on Central and Eastern Europe via stakes in JSE-listed New Europe Property Investments (Nepi) and Rockcastle. More recently, shares in UK-listed mall owner Hammerson and new AltX contender Greenbay were added to the portfolio, which made Resilient’s offshore portfolio balloon from R8.3bn in June 2015 to R14bn now. That represents about 36% of total assets.
Resilient also owns an R18.5bn portfolio of 28 shopping centres in SA, most of which are located in secondary cities and rural areas such as Polokwane, Tzaneen, Nelspruit, Mafikeng and Richards Bay. It has a sizeable stake in Fortress Income Fund and an R1.88bn exposure to Nigeria, where it coowns three shopping centres with Shoprite Checkers.
The decision by management, under the helm of MD Des de Beer, to forward hedge the projected income from its offshore holdings has paid off well.
The strategy has meant that dividend payouts from Nepi (euros), Hammerson (pounds) and Rockcastle (US dollars) weren’t affected by the recent strengthening of the rand against