Release Date: November 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Redefine Properties Ltd (JSE:RDF, Financial) reported a 2.9% increase in net asset value (NAV) to 7.88 rand per share, indicating strong asset performance.
- The company achieved a significant milestone by restructuring 27.7 billion rand of local debt into a common terms agreement, enhancing financial flexibility.
- South African occupancy rates improved to 93.2%, with Polish core occupancy at an impressive 99.1%, showcasing strong demand for their properties.
- Redefine Properties Ltd (JSE:RDF) maintained a stable liquidity profile with access to 4.8 billion rand in undrawn facilities and cash.
- The company has made substantial progress in solar PV capacity, with 43 megawatts installed and plans to expand by 40% in the pipeline, supporting sustainability goals.
Negative Points
- Distributable income per share decreased by 2.9% due to full-year funding costs, impacting shareholder returns.
- The loan-to-value (LTV) ratio is on the high end at 42.3%, primarily due to acquisitions, which may pose a risk if not managed effectively.
- Interest cover ratio is under pressure at 2.1 times, reflecting the impact of elevated interest rates throughout the year.
- Dividend per share decreased to 42.5 cents, with a payout ratio of 85%, indicating reduced returns for investors.
- Office sector renewal reversions remain negative at -13.9%, with expectations of further declines, particularly affecting the Alexander Forbes lease.
Q & A Highlights
Q: Can you please clarify the action plan for the Metro JV on slide 22? Why do you need to buy out the JV partner?
A: There are no put arrangements. The reason for wanting to buy out the partner is to avoid a waterfall where they get a preferential income return over us. It will involve selling some assets, and if I could sell the entire portfolio in one single move, I would. Unfortunately, that's not possible, so we are taking it on a phased basis.
Q: Dips guidance of flat to plus 6%—what needs to occur to reach the top end, and shouldn't this upside be utilized to reduce CCIR exposure?
A: To reach the 6% growth level in our DEPS, interest rates would need to cut at a faster pace, and economic growth in South Africa would need to improve. Energy stability is also crucial. Regarding CCIR exposure, we would like to see firm positive prints in terms of growth before considering adjustments.
Q: Can you provide an update on Wembley Square? Any interest to take up the space once Amazon leaves?
A: Amazon is vacating in December. We have a call center that will stagger its take-up, with the first batch occupying about 60% of the space in March and the balance towards November 2025.
Q: What explains the lower renewal success rate of 89% to 60% between South Africa and EL I portfolios?
A: The renewal success rate in South Africa printed at 67%, skewed by lower success in office and industrial portfolios. We target a 90% tenant retention rate for cash preservation, as it's more efficient to retain tenants than to let spaces go vacant.
Q: Are there plans to sell any of the EL I assets or land post-emerge?
A: Every asset is for sale at the right price. We prioritize selling unoccupied land without immediate development prospects. A good contender is the land adjoining M1 Marki, which we are confident will be sold soon.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
