Resilient wants to close the discount further

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With a market cap of over R23 billion, the market pays attention when Resilient releases results. To give some context to that number, Growthpoint’s market cap is just under R46 billion and shopping centre REIT Hyprop (which also released results yesterday) has a market cap of around R11.4 billion.

Resilient is a retail-focused REIT, so the pandemic did a thorough job of testing whether the fund is appropriately named. The group received R12.6 million from its insurers for pandemic cover, an amount which was not previously accrued. A claim of R13.7 million has been received for the social unrest, with R3 million still outstanding and not accrued for.

In the six months to December 2021, Resilient collected 97.1% of rentals. Covid-related discounts fell from R43.7 million in the comparable period to R21.5 million in this period.

The REIT owns 27 retail centres in South Africa and achieved a 3.7% valuation increase in the portfolio in this period. The average annualised property yield was 8.2% at December 2021.

The company has changed its year-end to December, so this “year” is only six months vs. the prior period which was a full calendar year. Comparing the movement in key metrics to the prior period is thus pointless.

Notably, Resilient’s net asset value (NAV) per share is R65.03. Yesterday’s closing price of R57.90 is a discount of just 11% to the NAV. Although this is a modest discount by many standards on the JSE, Resilient has appointed expert property sector advisors Java Capital to suggest strategies to unlock the discount.

One initiative that is already underway is to unbundle a portion of the shareholding in Lighthouse to Resilient shareholders. Regular InceConnect readers will recognise Lighthouse as a JSE-listed property fund that focuses on Europe. The recent strategic push of that fund has been into France. After the unbundling, Resilient will still hold a 30.7% stake in Lighthouse.

A dividend of 226.62 cents per share has been declared. This is a yield of 3.9% on yesterday’s price. Although it is a “final” dividend because of the change in year-end, it only represents distributable earnings achieved over six months.

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