Re­de­fine knock­ing on the Alsi 40 door

Finweek English Edition - - IN THE NEWS - BY GLENDA WIL­LIAMS

There is a grow­ing ap­petite for Redef i ne e quit i e s . The ben­e­fi­ciary of those chas­ing yields has been Redef i ne Prop­er­ties, its share price hav­ing grown by around 25% since Novem­ber last year. What it also means is that the com­pany is on the thresh­old of the All Share In­dex ( Alsi) 40, c ur­rently num­ber 42 on t he JSE’s re­cently pub­lished Alsi 40 in­clu­sion list.

Re­de­fine, the sec­ond-largest listed prop­erty com­pany on the JSE by mar­ket value, is an in­ter­nally man­aged di­ver­si­fied real es­tate in­vest­ment trust (REIT) that con­trols a prop­erty in­comeearn­ing as­set base of R56bn, which i ncreased by some R5bn dur­ing the six-month per i od t o 28 Febr ua r y. Its mar­ket cap­i­tal­i­sa­tion ap­pre­ci­ated a con­sid­er­able 25. 3% dur­ing t he half year to R45.6bn, of which 23% now r e p r e s e nt s in­ter­na­tional own­er­ship, wit h no­table i nvestor inf lows from Europe. That i nf l ow − a l most 14 0m units t rad­ing i n a sin­gle day − is the con­se­quence of Re­de­fine be­ing in­cluded in an in­ter­na­tional REIT, and it has re­sulted in sig­nif­i­cant un­der­ly­ing growth in the counter.

Aside f rom broader i nter­est f r om i nvestors i n t he REIT sec­tor, Re­de­fine’s ap­petite likely stems from some salient fea­tures: sig­nif­i­cant liq­uid­ity, ef­fec­tive cost con­trol, tight as­set man­age­ment, a global di­ver­si­fy­ing and grow­ing port­fo­lio t hat is i mprov­ing i n qual­ity, a ten­ant re­ten­tion rate of 89% and im­proved debt met­rics. “Re­de­fine’s solid per­for­mance, and growth in dis­tributable in­come for the half year of 31.4%, ref lects our en­hanc­ing ac­qui­si­tions and suc­cess­ful s t r ateg i es,” s ays An­drew Konig, CEO of Redef i ne. The com­pany re­ported dis­tri­bu­tion growth of 7.1% to 39c/share for t he half year to 28 Fe­bru­ary and Konig is con­fi­dent t hat t he c om­pany wi l l de l i v e r dis­tri­bu­tion growth of be­tween 7% and 7.5% for the full 2015 year.

De­spite c ha l l en­g­ing proper t y fun­da­men­tals, the JSE-listed REIT has a ro­bust bal­ance sheet. And it is cash f lush even af­ter mul­ti­ple ac­qui­si­tions. The de­ploy­ment of cash where it mat­ters saw the com­pany grow­ing its port­fo­lio sig­nif icantly dur­ing the pe­riod. In to­tal, Re­de­fine Prop­er­ties con­cluded ac­qui­si­tions of R10.7bn that in­cluded 31 di­rect prop­er­ties for a to­tal R3bn at an ini­tial yield of 8.5%, and the Leaf port­fo­lio for a col­lec­tive R4.7bn at an ini­tial yield of 7.8%. Its West­ern Cape port­fo­lio has been sig­nif­i­cantly en­hanced by the Leaf ac­qui­si­tion. Of the nine prop­er­ties − all of­fices and multi-ten­anted − three are in Cape Town and make



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