Resilient readies for slow growth

LISTED property fund group Resilient expects a period of weaker retail growth and consolidation and has adopted a more defensive approach, including rightsizing anchor tenants and increasing the entertainment offerings at its shopping malls.

Des de Beer, the managing director and chief executive of Resilient, said yesterday the drop in commodity prices, services interruptions, labour unrest and the weak rand would hurt retail sales growth in the year ahead.

“Although these (Resilient) initiatives increase dominance and improve overall trading densities, generally low yields are achieved,” he said.

Tough climate

De Beer added that Resilient’s property portfolio performed well in the year to June but comparable retail sales growth of 7.9 percent for the year was lower than the 8.8 percent achieved at the interim period.

Vacancies reduced from 2.2 percent in December to 2 percent in June.

Resilient’s strategy is to invest in dominant regional retail centres with a minimum of three anchor tenants and to mostly let to national retailers. It also develops new malls and does extensions to existing malls.

The fund yesterday reported a 19 percent year-on-year growth in distributions a share to 390.67c in the year to June.

“These results were achieved in a difficult economic environment with lower gross domestic product growth and interruptions in electricity supply.

“The dividends from listed investments were ahead of forecast, particularly the dividends from Rockcastle and Nepi (New Europe Property Investments) where Resilient benefited from the depreciation of the rand ,” he said.

At the end of June, 28.5 percent of the group’s property assets were offshore.

De Beer said dividends were forecast to increase by about 18 percent for Resilient’s 2016 financial year.

He said Resilient had agreed to acquire a 50 percent stake in the proposed Mams Mall in Mamelodi in Pretoria for R210 million and the existing 17 333m2 shopping centre on the site would be extensively redeveloped.

De Beer said a mall with a total gross lettable area of 65 000m2 was planned, which would include at least four anchor tenants and all major national retailers and with Resilient partially financing the co-developer.

Resilient’s board had approved extensions to six centres in the portfolio, involving a total capital expenditure of R2.1 billion. The largest is a planned R1.3bn extension to Irene Village Mall.

De Beer said the timing of the extensions depended on various approvals, particularly plan approvals by local authorities.

Nigerian expansion

De Beer added that Resilient’s board had also agreed to increase its capital commitment to the Resilient Africa joint venture for the development of malls in Nigeria to R4bn.

He said it had increased its interest in Resilient Africa to 60.94 percent after acquiring 9.96 percent from Standard Bank for R72.6m while Shoprite Checkers increased its interest from 32.68 percent to 39.06 percent.

Resilient shares fell 0.29 percent to close at R103 yesterday.