Archives for May 14, 2024

Redefine Properties acquires Pan Africa Shopping Centre with plans to enhance the retail experience

Redefine Properties, South Africa’s leading real-estate investment trust (REIT), has concluded its acquisition of a holding in Pan Africa Shopping Centre in Alexandra.

Andrew König, Chief executive officer at Redefine, says the addition of the centre to the company’s portfolio demonstrates confidence in South Africa’s retail property sector. “As Pan Africa and other recent acquisitions demonstrate, Redefine views its retail portfolio as a key driver for sustained long term growth, both in terms of the company and national socioeconomic development,” he adds.

Located on the corner of 3rd Street and Watt Street in Alexandra, Gauteng, Pan Africa Shopping Centre boasts a current GLA size of 15 775sqm and serves as a cornerstone of the community of Alexandra and surrounding areas. The easy-to-navigate, double-level centre is home to a wide range of national and independent retailers, as well as fast food outlets. Notably, the centre was a first of its kind in South Africa as it was built with fully integrated public transport, which included a taxi facility.

Currently, Pan Africa Shopping Centre is undergoing a multi-phase upgrade and expansion process that will see the centre’s lettable area increase to over 25 000sqm, featuring bigger spaces for existing retailers such as Truworths and Mr Price Group, as well as new additions such as W Edit, Pick n Pay Clothing and Sportscene. The expansion is scheduled to be completed in October this year.

ESG credentials of the centre will be enhanced through the inclusion of solar, propel air toilets and energy efficient lighting. The centre will also have full back up power and water to ensure retailer’s trade will not be affected by disruptions.

“Pan Africa represents a step forward in expanding our local portfolio and is an example of our commitment to facilitating a quality communal shopping experience for all South Africans. Going to your local centre, should be an exercise in comfort, safety and convenience, the defining attributes of any mass retail space,” König explains.

Redefine’s purchase of Pan Africa Shopping Centre comes on the heels of the company’s full acquisition of the Mall of the South – one of South Africa’s largest retail properties located in Johannesburg South – from previous co-owner RMB Investment and Advisory (RMBIA).

“Retail accounts for more than 40% of Redefine’s asset platform in South Africa. In alignment with our retail strategy and capital allocation plan, these acquisitions show we are looking to the future, to develop and manage properties that speak to a corporate vision and identity characterised by excellence, diversity, and versatility,” König concludes.

According to Redefine’s results for the interim period ended 29 February 2024, the company’s local portfolio has largely stabilised, with signs of improvement across most operating metrics. In that period, Redefine completed 379 147sqm of leases, with new deals accounting for 42% and renewals making up the balance. In addition, renewal reversion rates improved from -6.7% at August 2023 to -6.0% at February 2024, demonstrating the quality of Redefine property assets.

Enhanced portfolio performance boosts Dipula’s first half

Dipula Income Fund (JSE: DIB) delivered a healthy set of results for the six months to 29 February 2024, reporting improved operational and financial metrics, as well as strategic gains in a period that marked the first phase of its new solar photovoltaic initiative roll-out.

Dipula is a prominent, diversified, South Africa-invested REIT that owns a R9.8 billion portfolio of 166 retail, office, industrial and residential rental assets countrywide. Convenience, rural and township retail centres produce 64% of its portfolio income, with 61% of its rental income generated in Gauteng.

Izak Petersen, CEO of Dipula, comments, “This is a good set of results in which Dipula delivered top-line growth, albeit at relatively modest levels — a solid achievement given the background of elevated inflation, interest rates at their peak, and double-digit electricity tariff increases.”

Dipula’s revenue grew by 9%, and its net property income increased by a credible 6%, highlighting efficient operations supported by rental growth. While rental income remained under  pressure, with some rentals still reverting to market due to the persistent tough conditions in the office sector, Dipula showed a 2% increase in rental income. The net income growth was supported by Dipula’s tight check on expenses, which increased modestly relative to inflation levels. Dipula’s net asset value increased by 2% to R6bn.

Higher interest rates, however, worked against Dipula’s gains, resulting in a decrease in interim distributable earnings per share of 3%. The declared dividends amounted to 90% of distributable earnings.

Dipula concluded R105m of new leases during the period with renewals worth R845m and achieved a tenant retention ratio of 89%, keeping its buildings well occupied while strategically doubling the lease expiry profile of its office real estate portfolio from 1.5 years to three years.

Vacancies improved from 10% to a pleasing 8% during the period. In Dipula’s substantial retail portfolio, vacancies reduced from 9% to 6%. In its office portfolio, which accounts for only 15% of its gross income exposure, vacancies decreased from 27% to 23%. Vacancies in the industrial portfolio remained low at 5% compared to 4% in the prior period. The average vacancy in Dipula’s residential portfolio of 716 units for the six months was 6%, and it recorded rental growth of between 2% and 8% across its different properties.

“We believe that our residential assets offer great quality accommodation for tenants at extremely competitive rentals, especially in the ongoing tough operating environment in South Africa,” reports Petersen.

Dipula awarded a contract for 5.3kWp of solar projects at nine of its properties in the first phase of its solar roll-out. Dipula is investing R50m in this phase of its installation, which is anticipated to be completed before the end of August 2024.

“Before the end of this financial year, we expect to increase our solar power capacity more than fourfold, from the current 1.6kWp to 7kWp in total. Then, we plan on trebling this number in the next 24 to 36 months,” says Petersen.

Dipula’s interim results demonstrate a robust balance sheet with a favourable liquidity position. The company concluded its debt syndication, which extended its weighted average debt term to four years. Its debt levels remained stable at R3.7bn, with 61% hedged and no major facilities expiring in the next four years. Gearing decreased over the period to a healthy 36.3% from 36.9%.

Dipula anticipates stable conditions for the rest of its financial year to August 2024, with improved performance in 2025 as it completes various capital projects.

Petersen concludes, “A reduction in interest rates would boost performance going forward. Our rentals have room for improvement and will respond well to any uptick in the trading environment. Dipula will continue to drive stakeholder value with our focused, prudent approach to capital allocation while maintaining our strong balance sheet and working to further reduce vacancies and run efficient operations.”