According Jacopo Pari, the Chief Executive Officer (CEO) of RDC Properties Limited, the total cost of pipeline projects is estimated at R4.3 billion (P3.2 billion) of acquisitions. He says this is expected to deliver strong, sustainable cashflow for the Group and will position RDC as a multinational property business of stature, as well as provide a solid platform for future growth.
“It is exciting times for the company as we embrace the challenge of our times as well as the opportunity it brings,” Pari said.
As per a cautionary published on the Botswana Stock Exchange (BSE), RDC Properties is conducting negotiations, still in progress, for a cross-border acquisition in Zambia which, if successfully concluded, may have an impact on the value of the company’s linked units. The acquisition is intended to enhance the existing portfolio and is a continuation of the company’s strategy of portfolio and geographic diversification.
“Our long-term objective remains focused on accumulating and developing a quality portfolio of strategic assets, with rental and capital growth and with a regional focus and diversified income stream,” Pari said.
The group is selectively acquiring and developing a southern African portfolio in Botswana, Mozambique, Madagascar and South Africa, augmented by hard currency assets in Europe and the US. Pari says the group seeks out real diversification of the portfolio by region, sector and currency while actively seeking to balance portfolio growth between acquisition and development to strike a balance between capital and income generation. The group also seeks to accelerate yield accretive acquisitions, the positive impact of which will be felt in the years to come.
RDC announced a potential transaction which, on successful conclusion, will result in the acquisition of all or the majority of the shares not already owned by RDC in Tower Property Fund Limited, and the delisting of Tower from the Johannesburg Stock Exchange. The deal has been supported by RDC shareholders at a recent extraordinary meeting and a rights offer has been launched in order to fund the acquisition. Furthermore, the majority of Tower shareholders have irrevocably committed to supporting the offer.
Pari said the potential transaction represents an attractive qualitative and quantitative opportunity for RDC to transition into the next phase of its growth strategy. “The acquisition of the Tower portfolio of some 42 properties situated in SA (Cape Town/Jhb/KZN) and Europe (Croatia) with a total asset valued at R4.2 billion will be yield and net asset value accretive to RDC shareholders,” he said. “It will furthermore substantially increase the RDC market capitalisation. Arguably, this acquisition may position RDC as the leading property company in Botswana by portfolio size and geographical diversification.
“The strengthening of the company’s sectoral and geographic diversification is in line with current strategy and the operational synergies will enhance management efficiency and supplement its skillset. The afore-mentioned acquisitions are intended to enhance the existing portfolio and are a continuation of the company’s strategy of portfolio and geographic diversification.”
The Group owns eight properties in South Africa with a total of 123 active tenants and a total GLA of 54,682 square metres.
Even so, often in its line of business, a project comes along that not only brings the very best of teams together but becomes a beacon of optimism and inspiration and presents a unique opportunity to refresh and to re-energise. The newly open Radisson Red Rosebank has been that for RDC Properties.
The Radisson Red brand and ethos were perfectly aligned to RDC’s and the property firm believed it would bring some diversity to its hospitality portfolio. “Red embodied what we needed in a partner – fresh, innovative, cutting edge and bold, but even more than that, honest, authentic, consistent, drawing its inspiration from people” says Pari. “That is consistent with who we are, as RDC Properties.”
He said their vision for this property, strategically situated in the up and coming area of Johannesburg, Rosebank, is for it to be a unique home away from home for the bold and the savvy, to create employment opportunities for the community at large, and for it to contribute significantly to the distinctive culture of this part of the city. This is in line with the company’s purpose of owning and managing strategic property assets that add value to the communities they serve.
At any given time, Radisson Red is home to an assortment of beautiful art pieces that can be enjoyed by guests from all walks of life. RDC’s Capitalgro Portfolio in South Africa produced a total return of 4.3 percent for 2020, which compares favourably against an All-property Index’s average return of minus 35.5 percent for the same period.
The recent acquisitions – Voortrekker Road occupied by Capita, a multinational BPO company listed on the London Stock Exchange, was acquired in March 2020 at a cost of R174 million (P130 million). Caxton St is occupied by Rhino Africa Safaris, a market leader in the travel agency industry. They fortunately remitted their rental under the review period, a testimony to their financial strength and reserves.
The re-development of the 108 Albert Road property in Woodtsock, Cape Town began post-lockdown and is due to be completed in the 4th quarter of 2021. Earmarked to house biotech tenants in an Innovation Centre, Pari says the concept of the Cape Health Innovation Campus has gained traction and interest within the industry and it was recently featured in an international investment conference hosted by President Ramaphosa.
South Africa has been less affected by COVID-19 containment measures than Botswana. Under the prevailing circumstances, RDC took advantage of the low occupancy of Chobe Marina Lodge in Botswana to complete a revamp of the lodge which now boasts newly renovated and revitalised facilities.
Currently RDC is active in six countries – Botswana (22 properties), South Africa (eight properties, one development project), Mozambique (two properties and one development project), Madagascar (one property), USA (one property investment, one development investment) and Namibia (three projects).
“A well-diversified portfolio has proven to be resilient under the prevailing circumstances and we took advantage of the low occupancy of Chobe Marina Lodge to complete a revamp of the Lodge, which now boasts newly renovated and revitalised facilities,” says. “The Group’s prudent regional and sectoral expansion has set a strong basis for continued growth and RDC stands ready to take advantage of the inevitable rebound in the market. The strength and support of our unitholders and the depth of our management team has enabled us to apply our minds to different opportunities emerging from the ‘once in a lifetime’ dislocation of the property sector.”
Notwithstanding some signs of recovery, Pari says it is apparent that the effects of the pandemic will endure for longer than originally anticipated. As a result, some companies and industries will have to adapt to survive and ultimately to recover.
RDC’s prompt evaluation of the effects of the global pandemic on the industry and Group of companies, its cash flow generating capabilities as well as the Group’s limited gearing, lines of credit available and cash reserves have all helped the Group to weather the storm.
The Group’s rental income is predominately denominated in BWP and ZAR, with part of its revenue from rental and investments in EUR and USD, which has so far proven to be a good mix to mitigate the fluctuations of foreign exchange rates and reduce currency risk.