Redefine Properties income takes a knock

By Edward West for IOL

REDEFINE Properties’s distributable income fell 21.8 percent per share to 26.2 cents in the six months to February 28, compared with a pre-Covid reporting period, mainly because of the impact of Covid-19 on the property sector and economy.

However, the company was in a good position to benefit from an anticipated uptick in property fundamentals in line with the expected vaccine rollout in the latter half of the year, chief executive Andrew Konig said yesterday in a presentation.

No full-year distribution guidance was provided, and the dividend was deferred until the end of the financial year because of the uncertain environment.

Redefine shares dipped 4.36 percent to close at R4.17 on the JSE yesterday.

“We did not take this decision lightly. It is fundamental to our investment proposition to pay dividends, but, unfortunately, there is just too much uncertainty to factor in right now. We hope to have better news towards the end of the year,” Konig said.He said an improvement back to pre-Covid levels should take place once vaccines were broadly rolled out.

“We believe the bottom of the cycle has been reached. What we are expecting – and this is also what has happened in other countries who have made good strides on their vaccine programmes – is that the roll-out of vaccines will lead to more mobility in the system.

“This means more people going out to work, to shop and to play, and that quickly translates into confidence, which is the cheapest form of economic stimulus,” he said.

However, until this began, weaker property fundamentals and low economic growth had to be factored in for this year and beyond.

Redefine’s new chief financial officer, Ntobeko Nyawo, said Redefine’s loan-to-value ratio reduced to 44.3 percent at half-year from 47.5 percent, and the plan was to reduce this to below 40 percent next year.

Liquidity was “ample” at R4.8 billion, and 98 percent of gross billings were being achieved in collections.

Apart from the impact of Covid-19, the lower revenue was attributable to the deconsolidation of European Logistics Investment BV in the second half of last year, the sale of Leicester Street, and the disposal of non-core local properties.

According to News24, some of Redefine Properties’ offices are now empty. The property company, which owns a handful of shopping malls and offices in Sandton – including WeWork – is battling the highest office vacancy rate in its history.

Office vacancies rose to 14.6% from 13.8% at the end of the company’s 2020 financial year in August last year. When including vacant offices held for sale, this figure rises to 14.9%. Secondary grade offices that include older buildings and those not very well located had a vacancy rate of 24.2%.

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