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AGM statement & trading update
REDEFINE INTERNATIONAL P.L.C.
(Incorporated in the Isle of Man)
(Registered number 010534V)
LSE share code: RDI
JSE share code: RPL
ISIN: IM00B8V8G91
(“Redefine International” or “the Company”)
AGM STATEMENT & TRADING UPDATE
Redefine International, the FTSE 250 income focused UK-REIT, will hold its Annual General Meeting
today at 9am GMT, 2nd Floor, 30 Charles II Street, London, SW1Y 4AE, at which the Chairman, Greg
Clarke, will provide the following trading update:-
“It has been an active period since the August 2014 financial year end and good progress is being made on
letting and asset management opportunities within the portfolio. In particular, letting progress across our UK
shopping centres supports the view of gradually improving occupier demand outside of London.
The UK Hotel portfolio has had a strong start to the year and expectations are for continued underlying like-
for-like revenue growth.
Investment market activity remains strong and the occupational market is providing encouraging signs.
Against this backdrop, we continue to review opportunities to recycle capital. The sale of our Swiss portfolio
has proved timely and the sale means that our core European portfolio is now wholly focused on Germany.”
Trading update
Since August 2014, leasing activity in both the UK Retail and Commercial portfolios has increased with
evidence of stronger occupational demand becoming clearer in many major regional cities. Overall core
portfolio occupancy at 27 January 2015 improved to 97.6% (31 August 2014: 97.3%) with 15 leases signed
in the period. The core portfolio WAULT stands at 8.9 years with 43.8% of gross rental income subject to
indexation or fixed uplifts.
UK Retail
During the period, 12 leasing transactions were completed on previously vacant units totalling
approximately 20,700 sqft and altogether generating rental income of GBP0.3m. Occupancy increased to
95.9% (31 August 2014: 95.4%). Key leasing transactions during the period included:
- Grand Arcade, Wigan: Clarks has signed a 10 year lease on a 3,584 sqft unit
- West Orchards, Coventry: Hannigans has signed a 5 year lease on a 2,098 sqft unit
- Weston Favell, Northampton: EE has signed a 10 year lease on a 3,289 sqft unit
A further seven leasing transactions totalling approximately 17,000 sqft are at advanced stages of
negotiation.
The planned GBP4.0m redevelopment of Weston Favell, Northampton, to rebrand the centre and develop
the new market square, is due to commence next month having received planning approval. Of the 9,800
sqft of retail space to be redeveloped, approximately 65% is at advanced stages of negotiation with new or
existing tenants.
UK Commercial
Occupancy increased to 98.7% (31 August 2014: 98.3%). Key transactions included:
- The Crescent Centre, Bristol: Bourne Construction signed a new five year lease over 1,620 sqft. A
further 4,000 sqft is at advanced stages of negotiation.
- The sale of Churchill Court (detailed below) removed 25,900 sqft of vacant space and associated
operating costs.
UK Hotels
Underlying EBITDA for the Group’s RedefineBDL managed portfolio increased 10.2% for the first quarter
of the financial year. This excludes the recently acquired DoubleTree by Hilton in Edinburgh which is
trading positively and in line with expectations. In addition, terms have been agreed with Travelodge to
lease an additional 21 rooms at Enfield which will be developed from the existing vacant space on the
ground floor. The lease term will be co-terminus with the existing lease which expires in June 2047.
Europe
Occupancy remained steady at 99.3% (31 August 2014: 99.4%).
A number of short term leases at the Bahnhof Centre in Altona, Hamburg totalling 754 sqm 8,116 sqft and
with a current rent roll of €0.6m are under negotiation with existing tenants. The lease extensions are
expected to be finalised shortly at an aggregate increase of 3.2% to current passing rent.
Cromwell Property Group (“Cromwell”)
Cromwell acquired Valad Europe, Blackstone’s European property management arm for €145.0m. Valad
manages €5.3bn of assets across Europe including Central Eastern Europe, Germany and the UK. The
acquisition provides Cromwell with a European funds management platform with critical mass. Cromwell’s
external assets under management will increase to approximately AUD 9.0bn with funds management
earnings expected to contribute approximately 14% to Cromwell’s FY2015 earnings. The acquisition is
expected to be 5% accretive to Cromwell’s earnings in FY2016.
For further details please visit www.cromwell.com.au
Acquisitions and Sales
As announced separately today, the Company has completed the acquisition of a €156.8m portfolio of
German retail properties (the “Portfolio”) in joint venture with Redefine Properties Ltd, the Company’s
largest shareholder.
The Portfolio is valued at €156.8m reflecting a net initial yield of 7.5%. The Portfolio will be acquired
together with existing bank debt of €100.0m (the “Transaction”), which the joint venture intends to
refinance immediately after the Transaction closes. Subject to re-financing, it is expected to produce an
initial yield on equity in excess of 11.0%.
The portfolio of 56 properties total over 128,000 sqm of lettable area and comprise a mix of stand-alone
supermarkets, foodstore anchored retail parks and cash and carry stores. The properties are well located
within their respective micro markets, with 85% of the total annual rental income located in western
Germany and Berlin and the remainder in eastern Germany. Key portfolio attributes include:
- Gross rental income of €12.6m with a WAULT of 10.3 years
- Portfolio occupancy of 99.2% by area
- 100% of gross rental income is subject to indexation of between 65% - 75% of German CPI
- Edeka, Netto, Rossmann and Real account for over 90% of gross rental income providing strong tenant
covenants
As part of the Transaction, Redefine International will manage the Portfolio in return for a management fee
of 0.375% of Redefine Properties’ share of the Portfolio’s gross asset value. The Transaction is Redefine
Properties’ first direct investment in Europe and allows Redefine Properties to benefit from Redefine
International’s experienced European asset management team. The equity invested by Redefine Properties
reduces the overall investment risk.
As previously announced, the Company acquired the remaining 50% interest in the Premium portfolio joint
venture during the period for a consideration of €3.4m. The portfolio has a current market value of €33.4m
reflecting a net initial yield of 6.9%.
Churchill Court, Crawley, was sold for GBP13.5m, in line with book value which increased by 13.6% at the
last valuation in 31 August 2014. The Company had an effective 25% share.
The sale of the COOP portfolio in Switzerland has exchanged for SFr 36.0m (GBP27.5m), in line with the
August 2014 valuation but up approximately 10% in Sterling terms. Following completion of the sale, the
Company will no longer have any exposure to the Swiss market.
Further sales of smaller non-core assets are ongoing.
Capital management
Debt capital markets remain liquid and the recent sharp reduction in expectations of future interest rates is
providing positive conditions to refinance debt facilities and extend the maturity of the Group’s banking
facilities.
The UK Hotel portfolio facility was expanded to include the acquisition of the DoubleTree by Hilton in
Edinburgh. The facility has been increased to GBP110.5m with a maturity date of November 2021. The
facility margin of 2.275% remains unchanged and is subject to an interest rate cap of 3.0% for the term of
the loan.
A €15.8m banking facility associated with non-core European assets was settled for €10.0m and a new
facility is currently under negotiation.
Two smaller facilities totalling GBP9.3m were refinanced during the period at an aggregate all-in cost of
debt of 2.52% and five year terms.
Outlook
The expectation of an extended low interest rate environment in our key markets is likely to be supportive of
property values. In a low interest rate environment we expect high quality income returns to remain
attractive and, given the Company’s income focused strategy, we believe the Company is well positioned to
benefit from this.
Redefine International (RDI) is a FTSE 250 income focused UK-REIT with a primary listing on the London
Stock Exchange and a secondary listing on the Johannesburg Stock Exchange.
The Group invests in large, well developed economies with established and transparent real estate markets.
Within these markets, Redefine International’s £1 billion investment portfolio provides diversified exposure
to the commercial, industrial, retail and hotel sectors.
For further information:
Redefine International P.L.C.
Michael Watters, Stephen Oakenfull Tel: +44 (0) 20 7811 0100
FTI Consulting
UK Public Relations Adviser
Dido Laurimore, Claire Turvey, Ellie Sweeney Tel: +44 (0) 20 3727 1000
FTI Consulting
SA Public Relations Adviser
Max Gebhardt Tel: + 27 (0) 11 214 2402
JSE Sponsor
Java Capital Tel: + 27 (0) 11 283 0042
29 January 2015
Redefine International (RDI) is a FTSE 250 income focused UK-REIT with a primary listing on the London
Stock Exchange and a secondary listing on the Johannesburg Stock Exchange.
The Group invests in large, well developed economies with established and transparent real estate markets.
Within these markets, Redefine International’s GBP1 billion investment portfolio provides diversified
exposure to the commercial, industrial, retail and hotel sectors.
Redefine International is focused on delivering sustainable and growing income to shareholders through
investment in income yielding assets let to high quality occupiers on long leases. Capital values are
enhanced and protected by asset management and other low capex development activities.
As a UK-REIT, the Group aims to distribute of the majority of its earnings available for distribution on a
semi-annual basis, providing investors with attractive income returns as well as exposure to capital growth
opportunities.
www.redefineinternational.com
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