Redefine postpones dividend as it reduces debt

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Redefine postpones dividend as it reduces debt

Published Date: 2020-12-02 | Source: Stephen Gunnion | Author: Stephen Gunnion

Redefine postpones dividend as it reduces debt

The real estate investment trust says offshore dividends were withheld and Covid-19 had a big impact on its local portfolio.

Redefine Properties has put off a decision on its final dividend until February, taking advantage of a two-month extension granted by the Financial Services Conduct Authority. The move is also intended to help it reduce its loan-to-value (LTV) ratio to below 40% in the year ahead.

Releasing its full-year results, Redefine said the impact of Covid-19 negated work it had done to improve its loan-to-value (LTV), which measures debt as a percentage of the value of its assets. After selling some properties for R904 million, introducing an equity investor to its European Logistics Investment (ELI) and exiting its investment in RDI REIT, amongst other initiatives, its LTV reduced by 5.7%. However, the pandemic resulted in a 7.8% increase in the ratio due to the impact it had on property values.

The fund said it would reach its LTV target using the proceeds from the R5.1 billion sale of student accommodation properties in Australia, further optimising its property asset base and limiting the cash outflow of dividends.

The fund is now looking to further diversify its property portfolio, which is still dominated by SA properties. Its local assets were worth R65.4 billion at the end of August, down from R72.8 billion a year earlier, while its internal real estate investments in Poland and Australia were valued at R15.6 billion from R22.6 billion previously. It is existing the Australian market while increasing its exposure to Polish logistics properties.

Revenue for the year ended August fell 0.1% to R8.78 billion. It swung to a basic loss of 306.11c per share, from earnings of 61.76c last year, while its headline loss came in at 52.64c per share from earnings of 39.53c previously. Distributable income per share for the year fell 49% to 51.5c.

Due to current volatile market conditions and uncertainty brought about by the pandemic, Redefine said most of its offshore investments, with the exception of ELI, had withheld dividends to it. On top of that, its local property portfolio performance was heavily impacted by lockdown restrictions, necessitating the granting of rental relief packages totalling R318 million to support the sustainability of its tenants. Credit losses increased by R310 million given the heightened risk of tenants failing to meet their rental commitments, accounting for the bulk of the decline in distributable income.

The fund's shares rose 1.3% to R2.40 yesterday.





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