RDC Properties expects revenues to triple after new deal
Mbongeni Mguni - Katlego Isaacs | Monday April 4, 2022 18:30
RDC Properties closed the purchase of the Tower Property Fund on December 28 last year in a deal that added 46 properties located in South Africa and Croatia to the local group’s portfolio.
On Tuesday, RDC Properties chief financial officer, James Day explained that while the deal had ballooned the group’s investment and property portfolio by 153% to P5.8 billion, it had had a minimal effect on operating profits as it was concluded three days before the end of the 2021 financial year.
“As a result of the acquisition on December 28, which was only three days before the end of our financial year, the Tower Fund’s profit and loss results are in our statements only for that period even though their balance sheet is reflected on ours at 100%,” Day said at a results’ briefing. “The revenues for the whole portfolio are expected to grow by between two and three times at least, because of the acquisition in 2022.”
Day said RDC Properties rental revenues for the year ended December 2021 are therefore reflective of the group’s pre-acquisition performance, which he described as “pleasing”. The property group, which in Botswana owns the Masa Centre and the Chobe Marina Lodge among others, saw its revenues rise 11.4% to P146.6 million for the year to December 2021. The performance was helped by the positive impact of the acquisition of Voortrekker Rd and Caxton St properties in Cape Town.
Going forward, RDC Properties expects that in the 2022 financial year, its Botswana properties will contribute 18% to revenues, compared to 66% for South Africa and 15% for Croatia. The group also has other assets in Mozambique and the United States. Botswana accounts for a quarter of the RDC Properties’ investment portfolio by value, compared to 53% for South Africa and 19% for Croatia.
Directors are also keeping a close eye on vacancies in South Africa, which were estimated at about 13% as at February 28, 2022, compared with 1.9 percent for Botswana and zero percent for Croatia.
“In South Africa, many listed companies are facing the same situation especially in decentralised areas and I have heard a statistic that in Sandton, Johannesburg, vacancies are about 53%,” RDC Properties CEO, Jacopo Pari said. “We are looking at various initiatives such as residential conversions on two properties, converting properties to small or shared workshops or medical facilities. “The opportunities exist. “In Cape Town, we are virtually fully let.”
The group’s executive chairperson, Guido Giachetti expounded on RDC Properties’ plans.
“The idea is that we provide the assets we have and join with partners for redevelopments. “Northern Johannesburg is an area of opportunities for us, where we can join hands with partners playing in those spaces. “In Botswana, the demand we are going to try and activate is more in the senior living and retirement homes we have talked about in the past,” he said.
In Botswana, the bulk of RDC Properties’ assets, in terms of square metres, are hospitality, followed by office use while in South Africa, the portfolio is dominated by office and industrial use. In Croatia, the group’s square metres are dominated by retail use followed by office space.