Rockcastle upbeat on Poland
But CEO Spiro Noussis said on Tuesday that while the company's Polish assets had outperformed his expectations‚ he was adopting a cautious approach in the search for more acquisitions as the country experienced tougher economic conditions this year.
Rockcastle‚ a real estate investment trust‚ previously used to invest in other property funds only but has since shifted its focus to include buying and developing properties directly in Poland‚ one of the fastest growing European economies. It also serves as a rand-hedge stock for South African investors as it pays its distributions in US dollars.
Rockcastle - which is listed in Mauritius and Johannesburg - also released its financial results for the three months to March on Tuesday‚ reporting that its net asset value (NAV) increased from $1.50 per share at the end of December last year to $1.61 per share at the end of March.
Noussis said Rockcastle had acquired two assets in Poland since it began looking for opportunities less than a year ago. One was an existing mall and the other was a development asset.
He said Rockcastle's main focus was on developing and buying retail assets in Poland but its team would not turn down opportunities in Africa and other parts of the world if they were attractive investments.
"We have not been in Poland for a year yet but have been very careful. We may make more acquisitions in the country this year. For now‚ we are very happy with what we have achieved‚" Noussis said.
Rockcastle owns Solaris Centre in Opole‚ Poland‚ which it bought for €52m at a yield of 7.7%.
Noussis said the mall was anchored by an upmarket grocer and included major international fashion brands.
Rockcastle was negotiating a public-private partnership agreement with Opole to secure more developable land on an adjoining property to extend the mall from about 18‚000m² to 27‚000m².
Construction on Rockcastle's other Polish asset‚ a 16‚500m² mall development situated in Tomaszow Mazowiecki‚ was expected to begin in September.
Rockcastle's share price has risen nearly 31% for the year to date. It started the year at R24.20 and closed on Tuesday at R31.70.
Sesfikile Capital director Mohamed Kalla said Rockcastle's share price run was impressive but its performance could be weakened by interest rates rising abroad over the next few months.
"The NAV growth for the quarter ended March 31 was impressive at 7.3% in US dollars‚ however the stock is still trading at a 60% premium to NAV‚ which is well ahead of the current sector average premium to NAV of 32%‚" he said.
"While we think developments in Poland are positive‚ Rockcastle is still largely a geared play on global Reits (real estate investment trusts) in an environment where interest rates will likely increase over the next 12 months.
"We think a 60% premium is too demanding for this exposure‚" said Kalla.
Source: I-Net Bridge
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