Redefine shares hit after deferring dividend payout

REDEFINE Properties tumbled more than 7 percent on the JSE yesterday after the group said that it would defer the dividend payment for the six months to end following a 32 percent decline in distributable income during the period.

The group said that despite its revenue lifting 9.6 percent to R4.82 billion, distributable income fell 32 percent to 33.46 cents per share, due to the need for prudence in recognising offshore dividend streams in the face of the coronavirus lockdown and global volatility. “The local portfolio held up well given the challenges at the time,” chief executive Andrew Konig said.

He said the unprecedented evolving market conditions domestically and globally would be a challenge, and a “tale of two halves” for the 2020 financial year could be expected.

“While we cannot provide distribution guidance yet due to this evolving and dynamic situation, we also see this as a unique opportunity to change the way we do things to drive our business forward and to position ourselves to add stakeholder value,” he said.

Redefine shopping centres, industrial and office property assets were valued at R71.3bn (R72.8bn) at the end of the interim period, while the international real estate investments were valued at R17.9bn (R22.6bn).

Chief financial officer Leon Kok said stress tests showed that the group could meet solvency and liquidity requirements and they were “confidently” still in the process of reducing balance sheet risk.

There was R1.6bn in cash on hand, the interest cover rate was 3.9 times, and loan-to-value was 44.2 percent.

Kok said factors that would reduce loan-to-value by year end included the sale of student accommodation in Australia, the sale of R2.9bn of local properties, no acquisitions or speculative new developments, and a R600 million earn-out from a logistics development in Poland.

In the six months, the tenant retention rate was also at a healthy 95.7 percent. All near-term debt maturities were substantially refinanced. Some R1.9bn was deployed into property assets and R707m of properties were sold in the interim period.

Net asset value per share (excluding deferred taxation and non-controlling interest) was down 16.5 percent to 884.26 cents per share. The group’s local office vacancy rate was at 12 percent, and expected to rise.

Refurbishments completed were for 155 West Street costing R168.5m, as well as Kenilworth Centre, Knowledge Park and Sammy Marks at an aggregated cost of R87m. Redevelopments of R29.1m at Black River Park and The Towers were in progress.

Kok said impairments on offshore holdings played a key role in the financial result. The carrying amount of EPP for instance – in which Redefine holds 45.4 percent – was impaired by R442.4m. The carrying amount of RDI Reit, in which Redefine holds 29.4 percent, was impaired by R121.5m.

Constrained local economic conditions and the lack of catalysts for meaningful recovery had also necessitated the impairment of goodwill and intangible assets totalling R5.6bn.

“We have sufficient liquidity to absorb pressure and continue to place the highest priority on managing our loan-to-value ratio,” Kok said.

Redefine shares closed 10.13 percent lower at R2.04 on the JSE yesterday.