Diversified portfolio helps RDC Properties survive shocks
Directors at RDC Properties have credited the group’s well diversified portfolio, in terms of sector and location, for enabling the Botswana Stock Exchange-listed real estate outfit to perform well in the challenging macro-economic environment.
According to the group’s 2023 annual report, during the reporting period, the group’s investment and property portfolio grew by 1.3 percent to P6 billion despite the sale of 138 million less strategic assets during the year.
Revenue rose by seven percent to P561 million compared to P525 million that was recorded in the prior year. RDC said about 36% of its revenue was from Cape Town properties, 23% from Johannesburg, 20% from Botswana, 16% from Croatia and five percent from Durban.
Group Executive Chair, Guido Giachetti, reported uplift in the portfolio net operating income as reflected in the increase in revenue by some seven percent on the prior year. The trend is set to continue into 2024 as the forecast property contribution strengthens, he added.
“A major contributor to this has been the predicted rebound in the hospitality sector, with our hospitality assets showing significant growth in cash flow and rental contribution to the group,” he said.
“The conclusion of the acquisition of the David Livingstone Safari Lodge has further strengthened the ability of the group to leverage the sector improvement and its inhouse hospitality expertise to shareholder advantage.”
In terms of development projects, the company directors revealed that redevelopment of the Westlake Shopping Centre in Cape Town was proceeding well. The relaunch of the Centre is scheduled for the third quarter of 2024 with new anchor tenants Checkers and Clicks.
Giachetti added: “Post year end we have concluded a sale of shares agreement to dispose of our share of the newly completed Biotechnology Hub on Albert Road 108 – Woodstock, Cape Town.”
During the reporting period, the Botswana portfolio remained stable with currently only 7.5 percent of the portfolio vacant and low tenant turnover.
The RDC offices moved into premises at Masa Square from their long-time location in Broadhurst. Masa remained the single largest asset in the RDC portfolio.
On the other hand, the Croatian portfolio has benefitted from an extension of premises to accommodate the growth of RDC’s industrial tenant. Demand in the region continues to grow following Croatia’s inclusion as a full member of the European Union in January 2023. The portfolio enjoys zero percent vacancy and an impressive uplift in value of P74 million to P1.35 billion.
According to directors, the portfolio outlook for 2024 remains positive, with the easing of inflation and uptick in demand across all sectors. The company said it was evaluating interesting investment opportunities in assets in the green economy as this is a sector in which it would like to be increasing its footprint.
Meanwhile, during the period, RDC reported that its profit before tax has decreased by 14% to P179.6 million from the P208.9 million that was recorded on the prior period.
The loss was attributed to unrealised fair value reduction on interest rate derivatives as they move closer to maturity and the interest rate swap curve improves.
“These derivatives served, and continue to serve, their intended purpose by shielding us from adverse interest rate movements, allowing us to protect our borrowing costs,” Giachetti said. “The interest rate derivatives saved the group P16.8 million in interests for the
year.”