Di­a­mond in the rough

Finweek English Edition - - COMPANIES & MARKETS - LEANI WES­SELS

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.

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