New value analysis of Redefine International Plc (RDI:LSE)
New value analysis of Redefine International Plc (RDI:LSE)
A new value analysis of Redefine International, a company listed in London has been added to our research pages here. Redefine is London listed REIT. Redefine state that they focus on income driven returns so is a good fit for income investors.
A REIT (Real Estate Investment Trust) in UK pays no corporation tax as long as the company pays out 90% of property income as a dividend to shareholders. This makes the REIT form an excellent way for investors to access property income streams with tax advantages. The REIT structure also means that management are incentivised to pay out 90% of income to shareholders.
Redefine completed on a deal to buy some properties from an Aegon fund in September 2015. The details of the deal can be found here. Since the deal was announced the share price has declined. The price has presumably declined due to fears about the financing of the deal and the possible dilution of current common stock holders.
My analysis shows that a worst case scenario for holders of the common stock would be that 500 million new shares are issued at prices around 44p. I actually think this is unlikely so anything less that 500 million shares at any price around 44p will create value for current shareholders.
The purchase of the new properties adds new value in the form of new real estate and new income from the rents. The yields from the new properties are around the same level as Redefine’s current portfolio. The net asset value of Redefine will increase in line with the price paid for the new properties.
If Redefine is good value based on the current portfolio as it was in the 2015 Annual Report then it will be good value around 44p after the purchase of the Aegon properties.
To find out if Redefine International was and is good value click here to download the report.
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