Redefine' s shares (RDI) have risen 40 per cent year-to-date and 20 per cent since our buy tip (40p, 20 Oct 2011). Given signs of life in the regional property market and progress in the company's complex restructuring operation, investors have found its fat dividends increasingly hard to ignore.
Adjusted book value per share, nonetheless, fell 4 per cent to 39p during the second half, largely because the Australian dollar weakened, reducing the value of the company's equity investment in Cromwell, a Sydney-listed property group. Redefine's direct-let assets were broadly stable. The government-let portfolio acquired from Wichford in 2011 was the only one to post a valuation decline - down 1 per cent in the second half. Yet that was a vast improvement on the 6.1 per cent fall in the previous six months, offering further evidence that the market for secondary offices is now bottoming out.
Rental profits rose 18 per cent, from £25.5m to £30.1m. The company raised £128m of equity in October 2012, reducing its gearing and debt costs, but diluting dividends. Following a complex deal with Aviva in October - which involved acquiring a shopping centre in Northampton while reducing the overall corporate debt burden - Redefine now has a loan-to-value ratio of 57 per cent (from 82 per cent in 2012).
House broker Peel Hunt expects adjusted net asset value per share of 40p next August.
REDEFINE INTERNATIONAL (RDI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 48p | MARKET VALUE: | £507m | |
| TOUCH: | 48-48.5p | 12-MONTHHIGH: | 50p | LOW: 32p |
| DIVIDEND YIELD: | 6.5% | TRADING PROP: | £57.3m | |
| PREMIUM TO NAV: | 24% | |||
| INVESTMENT PROP: | £644m | NET DEBT: | 221% | |
| Year to 31 Aug Jun | Net asset value* (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 36.4 | -124.9 | -24.2 | 4.4 |
| 02013 | 38.7 | 67.2 | 6.7 | 3.11 |
| % change | +6 | - | - | -29 |
Ex-div: 20 Nov Payment: 29 Nov *Adjusted for non-recourse debt and provisions | ||||
