Resilient to boost funding for African expansion

Posted On Tuesday, 12 August 2014 10:19 Published by
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Resilient Property Income Fund’s strategy to be the leader in African continental property management is set to gain momentum.

Des de Beer ResilientThe real estate investment trust (Reit) announced upon releasing results for the year to June on Tuesday that it had decided to increase to R1bn its capital commitment to its joint venture, Resilient Africa, for developing properties in Nigeria.

Resilient has a 50.98% interest in Resilient Africa, with Standard Bank and Shoprite Checkers as partners.

The venture, which has about R2bn in equity, is building the 12,819m² Delta Mall in Warri, in Delta State. It has also recently commenced construction on a 12,291m² mall in Owerri, Imo State.

Negotiations were under way for projects at seven other sites. Construction on a further two developments is scheduled for the beginning of December this year.

Resilient CEO Des de Beer said the venture could be listed separately when it gained enough size.

"We have grown funds around the world in which we still hold stakes, but eventually the funds must be listed. We have seen this with Nepi, for example," he said.

Nepi, or New Europe Property Investments, is a South African and Romanian listed fund which owns malls in Romania.

In reporting its financial results, Resilient said rand depreciation had helped it tremendously as it declared a dividend of 168.35c a share for the six months ended June 2014.

This, combined with an interim dividend of 159.59c, represented an increase of 20.94% compared with the comparable prior period, making Resilient the best-performing property group this year. The group announced guidance for 12% distribution growth in 2015.

"This was something of a surprise but the market notes Resilient’s current record of strong results," Old Mutual Investment Group’s Evan Robins said.

Resilient has stakes in funds paying dividends in euros and dollars. These funds, including Rockcastle, which invest in property globally, and Nepi, buoyed Resilient’s group returns owing to the depreciation of the rand.

Resilient’s strategy is to invest in dominant regional retail centres in South Africa with a minimum of three anchor tenants and let predominantly to national retailers. This is while holding stakes in offshore property companies and while its has begun developments in Nigeria.

On the domestic front, Mr de Beer said "national retail sales at shopping malls held up surprisingly well in the current challenging economic environment". Varying performances were achieved in the provinces where Resilient was represented. North West achieved negative nominal sales growth of 0.3% because of the strike in its mining sector.

In KwaZulu-Natal, Boardwalk Inkwazi and Murchison Mall achieved disappointing growth too. This meant the province managed only 4.2% nominal sales growth.

Boardwalk Inkwazi was affected by the closure of the Bayside aluminium smelter, and Murchison Mall underwent refurbishment during the reporting period which disrupted pedestrian flows.

Gauteng achieved the highest growth, 15.9% year on year, which Resilient said was the result of the successful extension of The Grove shopping centre where the foot count increased by more than 40% and the trading densities of tenants in the original mall rose 19.4%.

Resilient’s most notable acquisition during the reporting period was Jubilee Mall in Hammanskraal at a cost of R975. Subsequent to year-end, Resilient also announced it had acquired Irene Mall for R665m.

The market was surprised Resilient had provided such strong forward guidance, said Old Mutual Investment Group’s Mr Robins.

Source: BD

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