RDI continues to hone its portfolio

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RDI continues to hone its portfolio

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Published Date: 2018-04-26 | Source: Stephen Gunnion | Author: Stephen Gunnion

RDI continues to hone its portfolio

The real estate investment trust says it's seeing an increased opportunity for real estate owners to become high-quality service providers

RDI, the real estate investment trust that rebranded from Redefine International, says it's seeing an increased opportunity for real estate owners to become high-quality service providers. It says it's well positioned to take advantage of the trend, given its operational platforms and experience with its hotel portfolio and the more recent expansion into London serviced offices. Earlier this year, the REIT bought four flexible offices worth £161.7, using the recent disposal of its German supermarket portfolio to fund the deal.

It's part of RDI's strategy of recycling capital out of low growth assets as it sees new opportunities. It says the strategy of improving the quality of the portfolio is well on track, following the completion of a number of successful disposals and well-time income enhancing acquisitions.

In the six months to end February, it realised disposal proceeds of £212 million at an average premium of 8.7% to August 2017 market values. At the same time, it increased its stake in the £104 million IHL hotel portfolio to 74.1% at an implied net initial yield of 6.9% and a yield on equity of over 10%.

Gross rental income increased by 2.1% on a like-for-like basis, with strong performances across the majority of its portfolio. The REIT reported a 12.8% rise in underlying earnings to £27.4 million Underlying earnings per share rose 8.2% to 1.46p, which it says is well ahead of its medium-term growth targets. It's increased its interim dividend by 3.9% to 1.35p.

Occupancies were steady over the six months at 97.3%, from 97.7% last August. It said London serviced offices traded ahead of expectations, with occupancies at 92.9% and average desk rates increasing marginally. The Redefine BDL Hotel Group (RBH) traded in line with expectations, with occupancies averaging 80% and revenue per available room 2.6% above the same period last year.

"We continue to make good progress against our strategic priorities, with underlying earnings per share growth of 8.2%, which is well ahead of target," chief executive Mike Watters said in a statement. "The income producing qualities of our portfolio have improved through further recycling of capital out of low growth assets into assets and sectors aligned with our strategy of delivering long-term sustainable and growing income."

The group says occupational and investment demand across the majority of the sectors it is invested in has remained strong, despite the heightened economic and political risks. It says it is managing its overall exposure to the retail sector as it expects continued rationalisation of certain retailers' physical store requirements. Its retail exposure now sits at 45.3%, down from 60% in August, with UK Shopping Centres now down to 18.8% of its portfolio by market value.

Its shares gained 3.4% to R6.39 yesterday, helped by the softer rand.



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