Redefine, the group which its chairman, SA property doyen Marc Wainer, started with long-time but now retired partner Wolfie Cessman, continues expanding. Redefine’s financial results for the half year to end February, released this morning, highlight a 7% growth in its distribution and the promise that the level will be maintained at least until the end of the financial year. The statement from the company also trumpets a 23% growth in market cap, fuelled by a higher share price. But with the interest rate cycle finally starting to turn, long-term owners of the stock might be thinking about taking some profit off the table. – Alec Hogg
From Redefine Properties:
Redefine Properties today reported distribution growth of 7.1% to 39 cents per share for the half year to 28 February 2015, delivering on its market guidance. 
Andrew Konig, CEO of Redefine says: “We are confident that we will deliver distribution growth of between 7% and 7.5% for the full 2015 year.”
JSE-listed Redefine is an internally managed diversified REIT that controls a property income-earning asset base of R55.6 billion, which increased by some billion during the half year. Its market capitalisation appreciated 23.6% during the six-month period to R45 billion, of which 22.9% now represents international ownership, with notable investor inflows from Europe.
Konig notes the increase in international investment in Redefine has come when domestic interest rates look like they could increase again. “This helps us fund future investments at a lower average cost.”
Its local investment assets comprise an actively managed diversified, directly-held property portfolio valued at R35.9 billion. Fountainhead Property Trust, in which Redefine has a 65.9% equity interest, has a R11.9 billion property portfolio, comprising predominantly of retail assets. Redefine now holds 11.5% of Emira.
Redefine has a 30.1% equity interest of R3.6 billion in Redefine International PLC (RI PLC), which is listed on both the LSE and the JSE. In addition, Redefine has a direct 50% interest in Australia’s North Sydney landmark tower, Northpoint, as well as holding 15.9% of ASX-listed Cromwell Property Group totalling R4.1 billion. Redefine has a further 10% indirect equity interest in Cromwell through RI PLC.
In the half year Redefine’s acquisitions included 31 direct properties acquired for a total R3 billion at an initial yield of 8.5%, and the Leaf portfolio for a collective R4.7 billion at an initial yield of 7.8%.
Redefine is making progress in the acquisition of all the Fountainhead assets – a process which it aims complete and implement before the financial year end.
Konig says Redefine will continue to seek out prospects for its international investment, “although it is difficult to source opportunities given the weight of money chasing property internationally right now.” He adds Redefine is also exploring new subsectors to support investor value. This includes de-risked projects in student and possibly residential accommodation, geared to test market demand and strategic suitability.
“The headwind of upward interest rate pressure will pose a challenge for the listed property sector, but we believe it will also create opportunities in the rest of the year. We will continue to identify and pursue enhancing opportunities which furthers Redefine’s strategy to become South Africa’s best REIT and deliver sustained value to our shareholders.” says Konig.
Highlights:
- Half year distribution +7.1%
- Total assets exceed R60 billion
- Market cap +23.6% to R45 billion
- Acquisitions of R10.7 billion
- Development of R3.7 billion
- First direct entry into Europe
