Diamond in the rough
THE LISTED PROPERTY sector is licking its lips: demand for the asset class is as strong as ever and investors are clamouring for more. More specialist property funds, more options, more quality assets on the JSE. Shopping centre-focused Resilient Property Income Fund has been bulking up its portfolio, with the recent announcement it will be buying the rest of The Grove mall in Pretoria it doesn’t already own for R356m in cash. That’s but one of the many malls the group has added to its portfolio over the past year. The group’s development spree includes the Mall of the North (Polokwane), the Brits Mall and the I’langa Mall (Nelspruit). It also plans to buy the Circle Triangle in Mthatha and the redevelopment of newly acquired Park Central in Bloemfontein.
Thanks to an increase in social grants, non-metropolitan malls are in the money. Resilient reported growth in distributions of 9,3% for the six months to end-June. However, everyone’s cottoned on to the gold mine that’s the rural market, particularly players such as Old Mutual and Rebosis. Resilient’s strategy will be shifting from developing those malls to buying – selectively, of course – already existing properties, according to the group. Going forward, expect more Sens announcements on refurbishments or extensions. However, another development or two may be up the group’s sleeve, with the focus likely to be on managing its existing assets.
And then CEO and property magnate Des de Beer’s consistently large purchases of Resilient shares are so frequent and ostentatious it’s hard to argue against its future earnings potential. Since May last year De Beer – mostly via the Suni Trust – has spent almost R45m on buying Resilient stock, according to Finweek calculations.
Despite its low yield, we still believe the price is fair. And even if you don’t agree with Government’s social grant system, you have to admit it’s working beautifully for Resilient.