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Unaudited financial results and declaration of interim dividend for the six months ended 30 June 2024
Resilient REIT Limited
Incorporated in the Republic of South Africa
Registration number: 2002/016851/06
JSE share code: RES ISIN: ZAE000209557
Bond company code: BIRPIF
LEI: 378900F37FF47D486C58
(Approved as a REIT by the JSE)
("Resilient" or "the Company" or "the Group")
Unaudited financial results and declaration of interim dividend
for the six months ended 30 June 2024
Nature of the business
Resilient is a retail-focused Real Estate Investment Trust ("REIT") listed
on the JSE Limited ("JSE"). Its strategy is to invest in dominant retail
centres with a minimum of three anchor tenants and let predominantly to
national retailers. A core competency is its strong development skills
which support new developments and the reconfiguration of existing shopping
centres to adapt to structural changes in the market. Resilient also
invests directly and indirectly in offshore property assets.
The Company's focus is on regions with strong growth fundamentals. Resilient
generally has the dominant offering in its target markets with strong grocery
and flagship fashion offerings.
Distributable earnings and dividend declared
The Board has declared a dividend of 218,97 cents per share for the six
months ended June 2024. This represents an increase of 7,8% compared to the
203,22 cents per share dividend for the six months ended June 2023.
Resilient's weighted average rental escalation is 6,2%. South Africa
experienced a significant reduction in loadshedding and load reduction
over the interim period. The benefit of the continuous operation of solar
installations and a saving of R11,1 million in diesel costs supported the
growth in net property income ("NPI"). Despite the acceleration of
planned maintenance, the South African NPI increased by 5,9%.
Commentary on results
South Africa
Retail sales increased by 2,9% during the interim period (4,7% on a rolling
12-month basis to June 2024), notwithstanding tough economic conditions and
the impact of construction activities in several shopping centres.
While consumer discretionary spend remains under pressure, Resilient's
portfolio has performed well as the long-standing strategy to align its
shopping centres with the needs of consumers is continuously implemented.
The portfolio, particularly in the Gauteng, North West and Northern Cape
provinces, benefitted from extensive redevelopment, the introduction of
grocery anchors as well as the opening or expansion of Dis-Chem and Clicks
stores.
During the interim period, Resilient concluded 369 lease renewals over
143 550m2 of gross lettable area ("GLA") at rentals on average 4,9% higher
than expiry. Leases were concluded with 79 new tenants (16 800m2 of GLA)
at rentals on average 36,3% higher than those of the outgoing tenants.
Escalations of 5,9% and 6,2% were agreed for renewals and new leases,
respectively.
Resilient owns 27 retail centres with a GLA of 1,2 million square metres.
Strategic asset management initiatives, particularly at Boardwalk Inkwazi,
Jubilee Mall and Soshanguve Crossing, to further reduce departmental stores
and cinemas while increasing exposure to grocery anchors, have resulted in
a temporary increase in vacancy. Resilient's pro rata share of vacancies
was 2,1% at June 2024.
France
Resilient owns a 40% interest in Retail Property Investments SAS ("RPI"),
the owner of four regional shopping centres in France, in partnership with
Lighthouse.
During the interim period, the French economy was affected by political
instability and slow economic growth. This has impacted the comparable
sales for the period, which declined by 2,8%. Resilient's share of NPI
increased by R9,4 million for 1H2024 compared to 1H2023. The vacancy was
8,0% at June 2024.
Spain
Resilient and Lighthouse each own a 50% interest in Spanish Retail
Investments SAS, SA ("SRI"). The acquisition by SRI's subsidiary, Salera
Properties S.L.U., of Salera Centro Comercial ("Salera"), a shopping
centre in Castellon, Spain was completed with effect from 31 January 2024.
Salera is fully let and trading well. Comparable sales growth for the
five months to June 2024 was 7,5%. The closure of the Zara store in the
high- street in January 2024 has contributed to this performance.
Nigeria
In Resilient's year-end results it was reported that the Company would
dispose of its Nigerian operations to Shoprite. Approval for the
transaction was received from the Competition Commission in South Africa
and Nigeria in May 2024. The Nigerian operations were deconsolidated during
the interim reporting period.
Energy projects
Resilient's objective is to reduce its reliance on grid-provided electricity
by continuing the expansion of its solar and battery installations. This will
enable Resilient to contain future anticipated electricity cost increases
and reduce its carbon footprint. Installed solar energy generation currently
totals 59,9MWp, supplying 27,7% of Resilient's total energy consumption.
It is projected that installed capacity will increase by 16,5MWp during FY2024.
Solar energy will then supply approximately 35% of Resilient's total energy
consumption. A further 6,7MWp is currently being considered and remains
subject to Board and regulatory approval.
The Grove Mall's 6MWh battery and Irene Village Mall's 4MWh battery have been
installed and the automated mini-grid systems are anticipated to be completed
by October 2024.
Property valuations
Resilient's full property portfolio is subject to an independent external
valuation annually at year-end.
The South African property portfolio was therefore valued by Quadrant
Properties Proprietary Limited ("Quadrant") at December 2023. To accommodate
the co-owners of Arbour Crossing, Galleria Mall and Tzaneen Lifestyle Centre,
Quadrant valued these properties at June 2024. Resilient's share of the positive
revaluation was R76,0 million (+3,1%).
The Nigerian portfolio was subject to a valuation by CBRE Excellerate for the
purpose of finalising the closing accounts in respect of the disposal
of Resilient Africa at 31 May 2024. Resilient's share of the negative revaluation
of the Nigerian portfolio was NGN1,1 billion.
Financial performance
Unaudited Restated
for the for the
six months six months
ended ended
Jun 2024 Jun 2023 Movement
IFRS information
Total revenue (R?000)* 1 780 587 1 657 922 122 665
Basic earnings per share (cents)* 409,34 294,63 114,71
Diluted earnings per share (cents)* 408,48 293,48 115,00
Headline earnings per share (cents)* 192,10 267,19 (75,09)
Diluted headline earnings per share
(cents)* 191,70 266,15 (74,45)
Dividend (cents per share) 218,97 203,22 15,75
Net asset value per share (R) 66,52 59,95 6,57
Management accounts information
Net asset value per share (R) 67,05 62,81 4,24
Loan-to-value ratio (%) 37,0 36,1 0,9
Gross property expense ratio (%) 38,2 38,1 0,1
Percentage of direct and indirect
property assets offshore (%) 24,8 24,0 0,8
* Represents continuing operations. Resilient's operations in Nigeria were
classified as discontinued operations during the interim reporting period and
the comparatives have been reclassified accordingly.
Prospects
The portfolio continues to remain defensive despite the challenging
economic environment. The establishment of the Government of National Unity has,
however, improved sentiment. This, together with the prospect of a decrease in
interest rates and continued stability of energy supply, has resulted in a more
positive outlook.
The rotation by Lighthouse from its investment in Hammerson to direct property
will result in improved and more predictable earnings. Resilient expects to
benefit from the anticipated reduction in interest rates. Distributions for
2H2024 will, however, be impacted by R16 million as in-the-money interest rate
hedges rebase.
Based on the improved outlook, the Board expects distributions of approximately
428 cents per share for FY2024. The updated guidance assumes that interest rates
remain unchanged, Lighthouse achieves its guidance, there is no further
deterioration of the macroeconomic environment, no major corporate failures
occur and that tenants will be able to absorb the rising utility costs and
municipal rates. Furthermore, loadshedding and load reduction remain
unpredictable and the impact thereof may affect this guidance. This updated
guidance has not been audited, reviewed or reported on by Resilient's auditor.
Payment of interim dividend
The Board has approved and notice is hereby given of an interim dividend of
218,97000 cents per share for the six months ended 30 June 2024.
The dividend is payable to Resilient shareholders in accordance with the
timetable set out below:
Last date to trade cum dividend Tuesday, 3 September 2024
Shares trade ex dividend Wednesday, 4 September 2024
Record date Friday, 6 September 2024
Payment date Monday, 9 September 2024
Share certificates may not be dematerialised or rematerialised between
Wednesday, 4 September 2024 and Friday, 6 September 2024, both days inclusive.
In respect of dematerialised shareholders, the dividend will be transferred
to the Central Securities Depository Participant accounts/broker accounts
on Monday, 9 September 2024. Certificated shareholders' dividend payments
will be posted on or about Monday, 9 September 2024.
This announcement is the responsibility of the directors and is only a
summary of the information in the 1H2024 results announcement and
does not include full or complete details. The 1H2024 results announcement
has been released on SENS and is available on the JSE website at
https://senspdf.jse.co.za/documents/2024/JSE/isse/RESE/1H2024.pdf, and
on the Company's website at https://www.resilient.co.za/financials.
Any investment decision should be based on the 1H2024 results
announcement available on the Company's website. The 1H2024 results
announcement is available through a secure electronic manner at the
election of the person requesting inspection.
Dividend tax treatment
In accordance with Resilient's status as a REIT, shareholders are advised
that the dividend of 218,97000 cents per share for the six months ended
30 June 2024 ("the dividend") meets the requirements of a "qualifying
distribution" for the purposes of section 25BB of the Income Tax Act,
58 of 1962 ("Income Tax Act"). The dividend will be deemed to be a dividend,
for South African tax purposes, in terms of section 25BB of the Income
Tax Act.
The dividend received by or accrued to South African tax residents must be
included in the gross income of such shareholders and will not be exempt
from income tax (in terms of the exclusion to the general dividend exemption,
contained in paragraph (aa) of section 10(1)(k)(i) of the Income Tax Act)
because it is a dividend distributed by a REIT. This dividend is, however,
exempt from dividend withholding tax in the hands of South African tax
resident shareholders, provided that the South African resident shareholders
provide the following forms to their CSDP or broker, as the case may be,
in respect of uncertificated shares, or the Company, in respect of
certificated shares:
a) a declaration that the dividend is exempt from dividends tax; and
b) a written undertaking to inform the CSDP, broker or the Company, as the
case may be, should the circumstances affecting the exemption change or
the beneficial owner ceases to be the beneficial owner,
both in the form prescribed by the Commissioner for the South African
Revenue Service. Shareholders are advised to contact their CSDP, broker
or the Company, as the case may be, to arrange for the above-mentioned
documents to be submitted prior to payment of the dividend, if such
documents have not already been submitted.
Dividends received by non-resident shareholders will not be taxable as
income and instead will be treated as an ordinary dividend which is
exempt from income tax in terms of the general dividend exemption in
section 10(1)(k)(i) of the Income Tax Act. Any distribution received by
a non-resident from a REIT will be subject to dividend withholding tax
at 20%, unless the rate is reduced in terms of any applicable agreement
for the avoidance of double taxation ("DTA") between South Africa and
the country of residence of the shareholder. Assuming dividend
withholding tax will be withheld at a rate of 20%, the net dividend
amount due to non-resident shareholders is 175,17600 cents per share.
A reduced dividend withholding rate in terms of the applicable DTA may
only be relied on if the non-resident shareholder has provided the
following forms to their CSDP or broker, as the case may be, in respect
of uncertificated shares, or the Company, in respect of certificated
shares:
a) a declaration that the dividend is subject to a reduced rate as a
result of the application of a DTA; and
b) a written undertaking to inform their CSDP, broker or the Company,
as the case may be, should the circumstances affecting the reduced rate
change or the beneficial owner ceases to be the beneficial owner,
both in the form prescribed by the Commissioner for the South African
Revenue Service. Non-resident shareholders are advised to contact their
CSDP, broker or the Company, as the case may be, to arrange for the
above-mentioned documents to be submitted prior to payment of the
dividend if such documents have not already been submitted,
if applicable.
Shares in issue at the date of declaration of this
dividend: 365 204 738
Resilient?s income tax reference number: 9579269144
By order of the Board
Johann Kriek Monica Muller
Chief executive officer Chief financial officer
Johannesburg
15 August 2024
Directors
Alan Olivier (chairman); Stuart Bird; Des de Beer**; Des Gordon;
Johann Kriek*; Dawn Marole; Monica Muller*; Protas Phili;
Thando Sishuba; Barry Stuhler**; Barry van Wyk
* Executive director
** Non-independent non-executive director
Company secretary
Sue Hsieh
(MBA, PGDip, LLB, Fellow member of CGISA)
Registered address
4th Floor, Rivonia Village, Rivonia Boulevard, Rivonia, 2191
Transfer secretaries
JSE Investor Services Proprietary Limited, 5th Floor
One Exchange Square, Gwen Lane, Sandown, 2196
Sponsor
Java Capital Trustees and Sponsors Proprietary Limited, 6th Floor
1 Park Lane, Wierda Valley, Sandton, 2196
Debt sponsor
Rand Merchant Bank (a division of FirstRand Bank Limited)
1 Merchant Place, corner of Fredman Drive and Rivonia Road
Sandton, 2196
www.resilient.co.za
Date: 15-08-2024 02:35:00
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