RDC’s unaudited financial results for the year ended June 30, showed the value of its investment portfolio rose by 148% to P5.8 billion while revenue shot up by 244% to P249.7 million, predominately as a result of the acquisition of the Tower portfolio.
Commenting on the results, Executive Chair Guido Giachetti said the acquisition has diversified the group’s portfolio in terms of sector and location, reducing their exposure to hospitality and offices and introducing some premium retail assets located in South Africa and Croatia.
“The purchase of this large and diversified portfolio at a substantial discount to net asset value is an opportunity for us to substantially improve the portfolio in the years to come,” he said. Following the acquisition of Tower, the group has maintained a loan-to-value ratio of 46%. “Standard Bank in South Africa, Tower’s principal bankers, has renewed the financing of the portfolio and indicated confidence in the new management team.
It is management’s focus to reduce the gearing over the medium-term and focus on cash flow,” Giachetti said. “We are confident that striking the correct balance between Growth and Value assets within the portfolio in the three years’ time horizon will lay the foundations to maintain and improve RDC’s current financial metrics.” The Botswana portfolio, with exception of the hospitality assets, has been reported to have performed well and within budget with a positive leasing activity (11,034m2 of new lettings), while collections have improved with the lifting of COVID-19 restrictions.
“We anticipate the leisure market to return to pre-Covid levels next year and the corporate market to take longer,” Giachetti added. RDC Properties’ major focus in South Africa has been evaluating the newly acquired portfolio situated in Cape Town, Gauteng, and KwaZulu-Natal.
The company said trading conditions remain challenging in the Gauteng office market, but the group-focused leasing activity has ensured that vacancies and tenant retention have stabilised.
The Capitalgro portfolio has been stable over the past six months, with improving prospects based on several significant deals being closed for occupation in early 2023 while the Radisson Red Hotel in Johannesburg, has steadily increased its occupancies and rates over the reporting period. Current occupancies are up to 60%, it said. On the other hand, the Croatian assets continue to perform well and the majorities are underpinned by blue-chip triple net leases.
The region has some encouraging growth prospects with its imminent (January 1, 2023) full EU membership status and moves onto the Common Monetary System (euro).
“Our rental enterprise in the USA continues to perform according to forecast and we have received a few offers to purchase that we are evaluating. Our development property, The Manning, is reaching practical completion with the expected realisation of this investment expected in the first quarter of 2023,” the Executive Chair said.
He further said progress has been made concerning the group’s acquisition of the David Livingstone Safari Lodge. Legal agreements are being concluded with the Development Bank of Southern Africa for the assignment of their debt at a substantial discount and the acquisition of the 100% shareholding from the owners.
The transaction will be conditional on the approval of the Zambian competition authorities. “In line with our strategy of working with local partners, we are pleased to announce that Union Gold will be co-investing with us in this venture (50%). The group has extensive experience of owning and managing hotels, about nine Marriott Hotels, and construction companies in Zambia,” Giachetti said.
