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Redefine posts interim headline loss

Posted On Tuesday, 12 May 2009 02:00 Published by eProp Commercial Property News
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Redefine Income Fund has recorded a headline loss per linked unit of 8.41c for the six months ended February from a profit of 9.82c in the year earlier period.

Brian AzizollahoffRedefine Income Fund reported on Monday that it had recorded a headline loss per linked unit of 8.41 cents for the six months ended February 28 from a profit of 9.82 cents in the year earlier period.

It also reported that distributions per linked unit had dipped to 26.80c from 27.10c a year earlier. Total assets were down slightly to R9.9 billion from R10.2 billion a year earlier.

However, an increase in distribution from the first quarter of 6.2% to 13.8 cents per linked unit for its second quarter ended 28 February 2009 was announced despite adverse economic conditions locally and globally.

Redefine CEO Brian Azizollahoff explains that growth in earnings in the first six months of the year has been adversely affected mainly by a slowdown in sales of sectional title trading stock, together with delays in transfers of sold units to purchasers as profit is only recognised on transfer.

On a positive note, there has been increased interest from purchasers in Redefine's sectional title office scheme, Buchanan/Newmarket, the company said.

In regards to the Redefine/ApexHi/Madison merger, Redefine issued revised listing particulars which referred to a forecast distribution for the year to August 31 2009 of 62.6 cents without taking into account the effects of the merger.

This forecast was prepared using actual results for the four months to December 31 2008, and forecast results for the remainder of the year.

In terms of future performance and outlook, since the release of that forecast the company says there has been a greater-than-expected deterioration in the overall economy and consequently the property market. The forecast could be impacted by lower distributions from Redefine's portfolio of listed securities, its joint ventures and slower sales in property trading,
exacerbated by delays in transfer.

However it is expected that income from the core property portfolio will be in line with the forecast. "It is difficult to predict the level of property trading sales which will be achieved as these are, by their very nature, lumpy. However, it is expected that income from the core property portfolio will be in line with the forecast," says Azizollahoff.

Gearing is at a conservative 36.5%. Managing its exposure to the cost of debt, Redefine decreased its borrowings by R63 million from August 2008.

The company's total debt of R3.6 billion represents a loan to value ratio of 36.5%, slightly higher that the 35.2% reported at the end of August 2008 as a result of the drop in value of the listed portfolio. The current average all-inclusive interest rate of Redefine's borrowings has decreased to 9.9% from 10.5% in August 2008.

The interest rate is fixed on 88.6% of its borrowings for an average period of five years. At the end of February Redefine's total property portfolio of R5.7 billion was comprised of 97 properties and properties for development and trading and constituted 58.8% of Redefine's total non current assets, slightly higher than the 56.8% in August 2008.

During the period under review, 29,632m2 of vacant space was leased and leases in respect of 38,408m2 were renewed.

In April 2009, the proposed acquisition by Redefine of Madison Property Fund Limited and ApexHi Properties Limited was supported by shareholders of all three companies. This transaction will create one of the largest listed property companies in South Africa, with an estimated market capitalisation of more than R18 billion, says Redefine.

In addition to the sanctioning by the High Court and the registration by CIPRO of such Court Orders, the merger is conditional upon the approval of the Competition Authorities and further announcements in this regard will be released on SENS and published in the press in due course.

"We are pleased with the outcome of this transaction to date. The new Redefine is set to benefit from increased earnings, a sound management base drawn from the three companies, increased international investor interest, better access to funding, cost savings and enhanced competitiveness," notes Azizollahoff.


Last modified on Tuesday, 29 April 2014 16:49

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