CFO Ntobeko Nyawo says Redefine will focus on liquidity

Ntobeko says Redefine is in a strong position to benefit from future growth in the property sector.

The impact of Covid-19 on the property sector and broader economy was largely the driving force for JSE-listed Redefine Properties (REIT) reporting a lower distributable income of 26.2 cents per share for the interim period to 28 February 2021.

Other factors that contributed to the decrease in revenue included the deconsolidation of European Logistics Investment during the second half of 2020, the sale of Leicester Street and the disposal of non-core local properties during the period, according to Redefine’s new CFO, Ntobeko Nyawo.

The reporting period covers the six months during which the economy was under the most severe lockdown restrictions. Distributable income is down 21.8 percent, when compared to the pre-Covid-19 reporting period.

The leading real estate investment trust’s 45.4 percent holding in EPP assisted with financial flexibility and bolstering own liquidity. Ntobeko said that company was in a strong position to benefit from future growth and attributes that to its focus on managing risk and optimising its balance sheet.

Redefine’s loan to value ratio, a gauge for balance sheet risk, was at 44.3 percent at half-year, compared to 47.5 percent at previous year end.

“We have continued to strengthen our balance sheet, through disposal of non-core assets. By doing the right things now we have access to ample liquidity [R4.8 billion] and achieved a pleasing 98 percent of gross billings in collections,” he said. “Our net asset value per share also increased to 719.74 cents per share. This means our business has remained highly cash generative, despite the pandemic.”

With the vaccine rollout under way, the economy and consequently the property sector are both expected to start showing improvements. “We believe the bottom of the cycle has been reached. What we are expecting – and this is also what has happened in other countries who have made good strides on their vaccine programmes – is that the rollout of vaccines will lead to more mobility in the system. This means more people going out, to work, to shop and to play and that quickly translates into confidence, which is the cheapest form of economic stimulus,” said CEO Andrew Konig.

He did, however, add that weaker property fundamentals and low economic growth have to be factored in for 2021 and beyond.