RDI REIT (RDI), formerly known as Redefine International, continued to deliver a solid revenue stream from its portfolio of retail and commercial space and hotels in the six months to February 2018. A 10 per cent rise in net rental income to £50.6m and a valuation uplift on the portfolio helped to push adjusted net asset value ahead by 2.2 per cent to 42.3p.
Efficient use of capital by recycling funds out of low-growth assets saw disposals of £211.8m at an average premium of 8.7 per cent to August 2017 valuations, with part of the funds used to buy an 80 per cent stake in a London-serviced office portfolio at a net initial yield of over 6 per cent. This is a notable acquisition because demand for flexible office space in London is growing strongly.
With weakness in the retail sector, RDI reduced its UK retail exposure to 30 per cent of the portfolio, with shopping centres down to 18.8 per cent, compared with 33 per cent three years ago. RDI also increased its stake in the IHL hotel portfolio to 74.1 per cent, and hotels now comprise 21.9 per cent of the group portfolio. And, while greater supply of rooms in London will moderate growth in revenue per room, revenue is still expected to grow by around 2.4 per cent this year.
Analysts at Peel Hunt are forecasting adjusted net asset value (NAV) of 40.9p at the year ending August 2018 (from 41.4p a year earlier).
| RDI REIT (RDI) | ||||
| ORD PRICE: | 36.4p | MARKET VALUE: | £693m | |
| TOUCH: | 36.35-36.5p | 12-MONTH HIGH: | 41p | LOW: 31p |
| DIVIDEND YIELD: | 7.3% | TRADING PROPERTIES: | £26.9m | |
| DISCOUNT TO NAV: | 13% | NET DEBT: | 90% | |
| INVESTMENT PROPERTIES: | £1.6bn | |||
| Half-year to 28 Feb | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 40.5 | 42.0 | 2.3 | 1.3 |
| 2018 | 41.7 | 60.8 | 3.0 | 1.35 |
| % change | +3 | +45 | +30 | +4 |
| Ex-div: | 9 Jun* | |||
| Payment: | 25 Jun* | |||
| *Provisional (proposed dates) | ||||
