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REDEFINE INTERNATIONAL P.L.C. - Interim Management Statement
Redefine Properties International Limited
(Incorporated in the Republic of South Africa)
(Registration number 2010/009284/06)
JSE share code: RIN ISIN Code: ZAE000149282
(RIN)
Set out below is an announcement which was released by Redefine International P.L.C. (formerly
Wichford P.L.C.) (Redefine International), the London Stock Exchange-listed subsidiary of RIN, on
the Regulatory News Service (RNS) of the London Stock Exchange today, 20 July 2012.
In terms of the Disclosure and Transparency Rules of the UK Listing Authority, Redefine
International is required to publish a statement by its management, disclosing all material events
and transactions that have occurred since Redefine Internationals interim period end and their
impact on the financial position of Redefine International.
REDEFINE INTERNATIONAL P.L.C.
(Redefine International the Company or the Group)
Interim Management Statement
The Board of Redefine International, the diversified income focused property company, today issues the
following Interim Management Statement relating to the period from 1 March 2012 to 19 July 2012.
Greg Clarke, Chairman of Redefine International, commented:
The Company has made good progress during the period with £47.5 million of legacy financing facilities
having been restructured or repaid, significantly reducing both leverage and near term refinancing
requirements. In conjunction with this, we are pleased to have been able to take advantage of some market
opportunities to make acquisitions of high quality income yielding assets. Despite the on-going challenges
posed by uncertain markets, and evidence of lower valuations in certain of the Companys portfolios, we
believe these activities will position us well as we work towards our capital raising and restructuring later
this year.
Overview
There has been substantial progress in meeting the Groups strategic objectives, particularly in respect of
exiting non-core assets, restructuring debt facilities and investing into sectors which continue to perform
and deliver strong income returns.
These actions, together with the previously announced intention to raise capital, will result in a significantly
strengthened balance sheet and reduction in exposure to near term debt maturities.
The Company is pleased to announce that the following transactions have taken place since the interim
reporting period to 29 February 2012:-
- The shares in the companies which held a 96% shareholding in the Justice Centre in Halle, Germany
were sold for a consideration which reflects an 8.4% uplift in the value of the investment and removes
37.1 million of debt from the Companys balance sheet;
- Repayment of the £17.15 million Aviva, Delamere Place Crewe loan at a 36% discount to face value;
- Repayment of the Kwik-Fit Stockport and Stafford loans of £1.18 million; and
- Acquisition of a 50% interest in two German discount centres situated in Kaiserslautern and
Waldkraiburg for a total consideration of 16.0 million (£12.6 million) as part of a joint venture with a
major pension fund.
Further details of these transactions are provided below.
Operations
UK Stable Income
The investment market for UK regional offices remains subdued as concerns over excess supply,
government austerity measures and the availability of bank funding continue to impact demand for these
types of assets. Transactional activity and values have been negatively impacted but the Company remains
focused on maintaining occupancy levels and income across the portfolio. The Companys exposure to UK
regional offices is anticipated to reduce materially as a result of the negotiations on the Delta and Gamma
financing facilities.
Overall occupancy reduced slightly to 93.6% (February 2012: 95.0%). A number of smaller asset
management initiatives are in progress and shorter term leases totalling 195,000 sq ft are under negotiation
for extension or renewal.
Following the refurbishment of Coburg House in South London, the Company has let the top floor (5,550 sq
ft) to InterHealth Medical at a rent of £69,313 p.a. This recent letting successfully completes a complex
asset management plan to retain the existing tenant in occupation while refurbishing the property,
extending the existing tenants lease to 2023 with a break in 2018 and re-letting the vacant top floor. The
property is now fully occupied.
Harrow redevelopment
Following receipt of full planning consent for a new residential led, mixed use development scheme on the
currently vacant Lyon House and Equitable House sites in the heart of Harrow town centre, the Company
has received Greater London Authority approval. It has also made significant progress on the Section 106
agreement with Harrow Borough Council for the proposed public realm.
The development, between St Johns and Lyon Roads, will provide a total of 287 residential units, of which
49 will be affordable housing. The scheme will offer a range of accommodation including maisonettes and
apartments across seven separate blocks of varying heights. The Company has already concluded a
development agreement with Metropolitan Housing Trust for the affordable housing element of the scheme.
The Company intends to secure a joint venture partner to carry out the development of the scheme. The
development is anticipated to commence in early 2013, subject to agreement on terms and the completion
of the Section 106 agreement.
UK Retail
Whilst overall conditions remain difficult, there have been signs of improved consumer confidence in the
second quarter of the calendar year, possibly driven by the Queens Diamond Jubilee celebrations and the
upcoming Olympics. There is a risk however, that this could be overshadowed by the impact of the
continuing European sovereign debt crisis.
Although the number of retailer insolvencies appears to have stabilised recently, certain retailers remain
under pressure. Some comfort can be taken from the fact that, apart from Game and Clinton Cards, the
profile of retailers entering administration has mainly been the smaller local and regional operators.
The portfolio maintained a healthy occupancy rate of 95.4% (94.8% as at 29 February 2012). Overall
footfall for the period to 31 May 2012 was largely unchanged at (0.1)% year on year.
Europe
The European portfolio has maintained near full occupancy and is providing consistent inflation-linked
rental income returns. The majority of the Groups exposure is to German discount retail assets let to
predominantly multi-national discount retailers and office assets let to government-backed organisations.
The Company has completed the previously announced acquisition in Waldkraiburg and anticipates the
imminent completion of the Kaiserslautern acquisition. Both investments are for a 50% interest in the
assets as part of a joint venture with a major pension fund. The aggregate purchase price of 16.0 million
(£12.6 million) reflects a yield on equity in excess of 10%. Both assets are newly constructed and fully let to
predominantly multi-national discount retailers on leases of between 10 and 15 years linked to 75% of
German CPI.
Hotels
The Hotel portfolio continues to trade well and, with the peak season and the Olympics approaching,
underlying performance is expected to exceed revenue budgets for the next quarter. Londons Organising
Committee of the Olympic and Paralympic Games (LOCOG) has taken occupancy of 222 rooms across the
Companys hotel portfolio throughout the period of the Olympic and Paralympic Games.
Underlying occupancies for the three months ending 31 May 2012 were marginally down on the same
period last year. However, this has been offset by a 9% increase in the average room rate. All hotels are
performing in line with their peers.
Cromwell Group (Cromwell)
The Companys strategic 23.13% shareholding in Cromwell continues to produce consistent distributions
supported by the high quality investment portfolio. A distribution of AUD 1.75 cents per security was
received for the March 2012 quarter at a fixed exchange rate of AUD1.4897:GBP1.00. The June 2012
distribution, announced as AUD 1.75 cents per security, is anticipated to be received on or around 19
August 2012. The receipt of this distribution has been fixed at an exchange rate of AUD1.5032:GBP1.00.
Distribution guidance for the 2012 financial year has been confirmed by Cromwell at AUD 7.0 cents per
security. Cromwell continues to refine its portfolio to focus on those assets considered to have the highest
risk-weighted return.
Debt Facilities
VBG portfolio
Significant progress has been made on the sale and restructuring of the VBG portfolio. A further
announcement will be issued in due course.
The VBG assets comprise four individual office properties let to a German government-backed social
insurance body in Berlin, Dresden, Cologne and Stuttgart. The leases have unexpired terms of between 7.8
and 12.6 years and are 100% index-linked to the German CPI.
Halle
The shares in the companies which held a 96% shareholding in the Justice Centre in Halle, Germany were
sold for a consideration of 1.0 million. This has resulted in the property, with a value of 36.3 million and
debt amounting to 37.1 million, having been removed from the Companys balance sheet together with
the loans to minority shareholders. The transaction reflects an 8.4% uplift on the value of the investment.
Crewe
In May 2012 the Company reached agreement with Aviva Commercial Finance Limited to restructure the
Delamere Place Crewe facility. The outstanding balance of £17.5 million was cancelled in return for an
£11.0 million cash settlement from the Company.
Delta and Gamma
The Company is in discussions with the servicer of the Delta and Gamma facilities to restructure the
facilities when they mature in October 2012. Negotiations are on-going.
Capital Raising
As previously announced, the Company intends to undertake a capital raising of up to £100 million after the
current financial year end in order to provide capital to strengthen the balance sheet, including restructuring
certain debt facilities, and to take advantage of investment opportunities in the current market.
The Company is well advanced with the preparation of the capital raising documentation and expects to
post the Prospectus in September 2012 which will set out details of the capital raising to Shareholders.
The Company anticipates that the capital raising will be in the form of a firm placement and open offer.
Redefine Properties International Limited, the Companys largest shareholder, will take up its full
entitlement in the open offer.
Dividend
On 24 May 2012 the interim dividend of 2.10 pence per share was paid to all shareholders on the register
as at 11 May 2012. The Company fully expects to meet its previous forecast of a total dividend for the
current financial year of 4.4 pence per share.
Outlook
Lower valuations are anticipated in the near term as rental and capital growth remains susceptible to fragile
economic conditions and the availability of capital remains limited. These conditions are however, providing
attractive opportunities for well capitalised investors.
The progress achieved in this last period places the Company in a significantly stronger position from which
to raise new capital. Over £47.5 million of legacy facilities have been, or are in the process of being,
restructured or repaid, significantly reducing both leverage and near term refinancing requirements. The
remainder of the financial year will be focused on the restructuring of the Delta and Gamma facilities and
progressing the proposed capital raising.
Further enquiries:
Redefine International Property Management Limited
Investment Adviser
Michael Watters, Stephen Oakenfull Tel: +44 (0) 20 7811 0100
FTI Consulting
Public Relations Adviser
Stephanie Highett, Dido Laurimore, Olivia Goodall Tel: +44 (0) 20 7831 3113
20 July 2012
Sponsor to Redefine Properties International Limited
Java Capital
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