RDC Properties closed the P980 million purchase of the Tower Property Fund on December 28 last year in a deal that added 46 properties located in South Africa and Croatia to the local group’s portfolio.
The deal ballooned the group’s investment and property portfolio by 153% to P5.8 billion but had a minimal effect on profits as it was concluded three days before the end of the 2021 financial year.
Briefing investors on the interim results on Wednesday, the group’s CEO, Jacopo Pari said despite the outbreak of the Omicron variant at the beginning of the year, followed by high inflation and interest rates in most markets, RDC Properties’ performance had proved resilient.
Part of this is due to asset diversification with properties in strong markets such as the United States and Croatia, while the hedging of interest rates on debt and inflation-linking of leases also protected the group’s bottom line.
“The risk management is there and we do not have our eggs in one basket,” he said. “We have seen the rebound in the leisure market in South Africa, which is about one or two months ahead of Botswana. “At Chobe Marina, we had a dip in July but August and September are proving to be strong. “All eyes are on 2023 where we expect to reap the benefits of the rebound.”
Pari said assessments had been conducted on the entire group’s portfolio, comprising 75 properties, with a decision made to dispose of 10 non-strategic assets. The RDC Properties board has approved the disposal of P300 million worth of assets, he said.
Most of the assets to be disposed of are in Johannesburg and Botswana.
“Our assessment was to understand the tenants, other factors and also evaluate them, looking at immediate returns and how these would develop over the years. “We identified those 10 that are not really matching our vision and this is the start of the process. “It will not be overnight, but we have to realise the maximum we can and use the proceeds to deploy capital elsewhere,” he said.
CEO of properties in South Africa, Gary Fisher said the disposal would be done in two 'baskets'.
“One is properties that are ready for sale or where deals have been concluded,” he said. “There’s quite a lot of work being done in readying properties that are not showing any more value for sale to the market. “We don’t plan on disposing of properties below the book value. “The second basket is some of the older properties in the Botswana portfolio and that is in the medium term, maybe one or two years. “The funds will go towards reducing our debt with a release of mortgage for some of them and we have to reduce some of the more expensive debt in the short term, such as that spent on the Tower purchase.”
