Given RDI Reit (RDI) is battling plummeting retail valuations - which in October caused four of its shopping centres to breach their loan-to-value covenants - it is unsurprising that the landlord is prioritising shedding assets in an effort to further reduce leverage. It has sold or exchanged contracts on £121.5m-worth of property since August 2018, the largest of which was the Bahnhof Altona Center in Hamburg, as part of plans to exit its German retail portfolio.
“Germany still has really good liquidity,” says deputy chief executive Stephen Oakenfull, who told us his team is still able to find counter-parties "willing to pay a reasonable price.” Indeed, all German disposals were made at or above market value. Yet the UK sales market is tougher, as full-year results clearly show. Although like-for-like net rental income rose 0.7 per cent after two units at the Priory Retail Park in Merton were re-let at higher values, the UK retail portfolio incurred a £33.6m revaluation loss.
RDI is now focused on building its exposure to industrial and distribution assets, acquiring a business park in Farnborough and forward-funding the development of two distribution units in Bicester.
Analysts at Berenberg forecast adjusted NAV of 182.7p at the August 2020 year-end, and 182.5p a year later.
| RDI REIT (RDI) | ||||
| ORD PRICE: | 127p | MARKET VALUE: | £483m | |
| TOUCH: | 127-127.8p | 12-MONTH HIGH: | 176p | LOW: 97p |
| DIVIDEND YIELD: | 7.9% | TRADING PROP: | nil | |
| DISCOUNT TO NAV: | 29% | |||
| INVESTMENT PROP: | £1.15bn | NET DEBT: | 90% | |
| Year to 31 Aug | Net asset value (p)* | Pre-tax profit (£m) | Earnings per share (p)* | Dividend per share (p)* |
| 2015 | 200 | 84.0 | 25.5 | 16.25 |
| 2016 | 195 | 8.6 | 2.5 | 16.0 |
| 2017 | 205 | 73.5 | 18.5 | 13.0 |
| 2018 | 211 | 64.2 | 15.2 | 13.5 |
| 2019 | 180 | -79.8 | -21.7 | 10.0 |
| % change | -15 | - | - | -26 |
| Ex-div: | 21 Nov | |||
| Payment: | 10 Dec | |||
| *Adjusted for 1-for-5 share consolidation | ||||
