Our opinion on the current state of RES

The Resilient group of companies (Resilient, Lighthouse - previously Greenbay, Rockcastle, and Fortress) were once considered the high-flyers of the property sector until the beginning of 2018 when a damning report by 360ne Asset Management shook investor confidence. The report alleged that the high share prices of these four real estate investment trusts (REITs) were primarily a result of their interconnected cross-shareholdings. Consequently, the price of Resilient (and the other group members) plummeted to R51.50 by the 3rd of April 2018. Following the report, the share price fluctuated between R50 and R70 until COVID-19 exacerbated the decline, pushing it down to the range of R30 to R45.

A lengthy investigation by the Financial Sector Conduct Authority (FSCA) finally concluded on 8th November 2019, revealing no evidence of insider trading or share manipulation. As a result, the share price began to recover some of its losses. In its results for the year ending 31st December 2023, the company reported a loan-to-value (LTV) ratio of 35.2%. The South African property portfolio recorded comparable net property income ("NOI") growth of 7.1% for the year. However, the French portfolio was negatively impacted by tenant failures and receiverships during the first half of 2023.

Resilient and Lighthouse each own a 50% interest in the holding company of Salera Properties, which is fully let to 147 major international and national tenants. The current annual footfall is reported to be 9 million, representing an 8.7% increase compared to 2019 levels.

From a technical standpoint, the share has been on a downward trajectory since the beginning of 2022. Considering the challenges and potential benefits, the company is contemplating delisting from the JSE as part of its strategic considerations.