Cautious Resilient puts Nigeria on hold

No further development is anticipated until the West African country’s economy recovers

RESILIENT, the listed real estate investment trust, has postponed further development in Nigeria until the country’s economy recovers and said it was considering other direct investment opportunities to achieve its goal of having up to 50 percent of its total direct and indirect property assets in offshore assets.

Des de Beer, the managing director of Resilient, said yesterday that 39.4 percent of the group’s total direct and indirect property assets were offshore assets in December.

However, De Beer said that with the challenges currently being experienced in Nigeria, its board was considering other direct investment opportunities which met the criteria of owning dominant regional malls to achieve this goal.

Resilient owns 60.9 percent of Resilient Africa, a joint venture for the development of malls in Nigeria in partnership with Shoprite Checkers.

The company had advanced R951 million to Resilient Africa, with additional commitments totalling R185m at end-December.

De Beer said despite an improvement in the oil price, trading conditions in Nigeria remained challenging, largely because of the weak naira and currency controls.

“Rentals remain under pressure. Further developments will be postponed until the economy recovers sufficiently to provide an acceptable return,” he said.

Resilient board has approved capital expenditure totalling R2.14bn and provided an update of extensions to some of its malls in South Africa.

De Beer said they were waiting for the transfer of the last portion of land that would facilitate the extension of the existing 29 644m² Irene Village Mall to an 80 000m² regional mall.

He said earthworks were 60 percent complete, adding Resilient’s board had previously approved the development at a yield of 7 percent on the anticipated cost of R1.5bn.

De Beer added that transfer of the 50 percent interest in Mams Mall had been delayed by “administrative inertia at the local authority”.

He said construction would commence once transfer had taken place to extensively redevelop the 17 333m² existing shopping centre into a 70 000m² mall, which would include at least four anchor tenants and major national retailers.

“Resilient will partially finance the co-developer. Management forecasts a yield of about 8 percent on Resilient’s cost of R650 million,” he said.

Other capital projects include extensions to Boardwalk Inkwazi, the Diamond Pavilion, the second phase expansion of I’Langa Mall and the refurbishment of Limpopo Mall.

De Beer said extensions to Mafikeng Mall, The Grove and Tzaneen Lifestyle Centre remained dependent on various approvals, particularly plan approvals by local authorities.

Resilient yesterday reported a 16.2 percent increase in distributions a share to 270.22 cents for the six months to December from 232.46c in the previous corresponding period.

De Beer attributed this growth to a solid performance by the South African property portfolio and continued outperformance by the listed holdings.

He said Resilient also benefited from attractive currency rates previously locked-in on its offshore dividend income from its holdings in Greenbay, Hammerson, Nepi and Rockcastle.

“Results from the Nigeria property portfolio, although relatively small, were disappointing,” he said.

Vacancies remained unchanged at 1.8 percent compared to June last year.

De Beer said Resilient’s distributions were forecast to increase by between 15 percent and 17 percent for the 2017 financial year.

Shares in Resilient rose by 0.39 percent yesterday to close at R117.