RDF did well in controlling its cost, specifically in the retail and industrial sectors. Our previous underlying concern was that unwinding the JV’s would cause either a loss in value for RDF shareholders or an increase in LTV, which would slow future growth. Our views on the Polish JVs has not changed. The see-through LTV is still high at 47.2%, and while management have said that ELI might not be consolidated and not increase LTV, the issue remains that there is too much debt in the JV structures. While our forecasted DIPs are slightly below management guidance, this will likely be due to foreign currency hedging (we do not make calls on currency changes). The slight increase in the target price is due to the change in interest rate outlook, improved performance of retail and industrial sectors in South Africa, and a more stable rental outlook in South Africa.
