By Nick Wilson

This growth was significantly higher than the average distribution growth for the listed property sector of between 13% and 14%.

Redefine CEO Brian Azizollahoff said the overall performance of the property portfolio had also contributed to the strong performance as rentals had “firmed”.

The company’s core property portfolio grew about 10% and also influenced the results.

“We (also) achieved substantial savings in cost of borrowings and we had a very good performance from our listed (property) portfolio,” said Azizollahoff.

Redefine invests in a combination of fixed property and listed property assets. By value, Redefine’s investment split is 53% in fixed property and 47% in listed property.

Property trading profits, secured mainly from the resale of developments in the listed property sector, have been criticised by some property pundits who have concerns about the sustainability of such income. But Redefine’s developments and pipeline of developments are valued at R2,6 billion.

“That extends out by five years. We have sufficient stock of land to ensure that the trading profits will continue to make the kind of contribution they have and that the contribution will grow, although it will never be a significant portion of our operating profit,” Azizollahoff said. Trading profits contributed about 6% of net operating income.

During the period under review, the company’s market capitalisation rose 60% to R6 billion and its property assets increased 61% to R9,9 billion.

Redefine is also upbeat about its future prospects and is expecting a minimum 14% growth in distributions next year.

It said this growth was because of demand for space at higher rentals, favourable yields on new developments, a pipeline of property trading revenue, strong income growth from the listed securities portfolio, and debt management.

Kundayi Munzara, a property analyst at Investec Listed Property Investments, said Redefine had delivered a fourth-quarter distribution that was marginally less than what Investec had expected, at 14,65c a unit.

“The company has, however, been successful in integrating the Spearhead portfolio that was acquired in 2006.

"Vacancies have also come down significantly over the last six months, from just under 6% to 2,2%, and we expect the benefit of the newly let space to be realised in the next six months,” said Munzara.

The company was now slightly less “hybrid”, with 54% of total assets being physical property. The term hybrid refers to property companies that hold a combination of listed and physical property assets.

Munzara said that Redefine’s yield-enhancing development pipeline was “particularly exciting” at about R2,6 billion.
 

Business Day