Archives for July 2024

Redefine executes on water resilience strategy amid growing concerns over outages

Johannesburg, 15 July 2024 – In response to growing concerns over the possibility of further water outages in South Africa, JSE-listed Redefine Properties is taking proactive steps. The company aims to improve water efficiency across its portfolio by reducing consumption and enhancing existing backup capacity as part of its water resilience strategy.

“While our focus has largely been on reducing water consumption, we are now in the process of developing further storage capacity to provide up to a five-day buffer in certain of our buildings in case of a major water outage,” says Sustainability project manager at Redefine, Victor Mathey.

In some parts of the country, water shortages have increased in frequency, with water supplies cut off for up to ten days in a row or more. Experts blame the issues on municipalities’ underdeveloped infrastructure and lack of infrastructure maintenance, which is impacting supply networks.

Lesotho’s Katse Dam, which forms part of the Lesotho Highlands Water Project and provides critical water supply to regions across the country, is scheduled to undergo major maintenance over a six-month period, beginning in September and continuing until March 2025.

“Further major outages are expected due to scheduled maintenance and ongoing infrastructure issues, and we are planning to get ahead by rolling out projects to establish on-site water backup at buildings to increase their water security should such outages occur.”

He said Redefine had already worked hard to ensure a significant capacity of standby water. “Currently, our installed storage capacity is 6,660 kL. However, to achieve a five-day buffer at our current water consumption levels, we need 38,000 kL. Therefore, our intention is to install new water tanks to guarantee sufficient capacity for up to five days.”

The Vaal River system and the Sterkfontein Dam are expected to have enough water in storage to last for the six-month period, according to the City of Johannesburg and industry participants, as the maintenance at Katse Dam is scheduled for the summer period.

Even so, there continues to be massive undersupply, particularly in Gauteng. Gauteng’s water supply issues stem from a nine-year delay in the Lesotho Highlands Water Project Phase 2, exacerbated by a rising population. Until the project is completed in 2029, the province will face periodic water outages, as demand surpasses supply.

“The undersupply doesn’t only impact areas like Sandton, Rosebank, and Bedfordview but also rural areas with inferior water infrastructure. By reducing consumption and creating water security at our buildings, we are actively investing in the sustainability of Redefine’s assets. This ensures that our buildings remain functional during outages by alleviating demand on the various metro infrastructures, especially where such infrastructure incorporates borehole systems. These action plans extend beyond Gauteng, as demonstrated by the ‘day zero’ infrastructure projects installed at our Cape Town-based assets.”

Mathey added that by adding more backup capacity, Redefine will lessen demand on the municipal water system when its capacity is under pressure, allowing the limited supply to instead benefit nearby communities.

Interventions implemented to reduce demand on water resources

Following the implementation of a series of water reduction initiatives, Redefine has seen a 165 mL reduction in consumption across its SA portfolio over the last two financial years. This far exceeds initial reduction targets of 74 mL year-on-year and demonstrates that related interventions, notably the rollout of water efficient toilets, such as Propelair, and smart metering installations, are beginning to bear fruit.

Johann Nell, Head of development and industrial asset management at Redefine, says that Redefine made use of a digital water monitoring system at many sites, with this infrastructure being rolled out at others currently.

 “Digital monitoring enhances proactive property management by immediately notifying us should there be a change in a building’s water consumption profile. Whereas historically, readings were taken at a wider frequency of time, making it difficult to identify and tend to issues such as a leak immediately.”

An example of the significant reduction and saving that the monitoring system has enabled is Ushukela Industrial Park, where water consumption decreased from 1,062 kL in January to 399 kL in February after a leak was discovered and investigated right away.

Furthermore, the installation of over 2,000 Propelair toilets has been highly successful in reducing overall water consumption throughout our office and retail portfolios. Propelair toilets use over 80% less water than conventional water flush toilets. For instance, Golden Walk Shopping Centre experienced a 50% decrease in consumption, which was directly attributed to Propelair installations.

Nell said Redefine remains focused on introducing further interventions that sit mostly at an operational level, including monitoring and proactively managing consumption, especially at big buildings where there are often leaks, running toilets, dripping taps, and leaky irrigation systems.

“These interventions, together with the expansion of our backup storage capabilities, will further improve water efficiencies within our properties and ensure the resilience and operational continuity of our assets in the case of major water outages,” Nell concludes.

Further to the publication of Hyprop’s interim results for the six months ended 31 December 2023 (“HY2024”) on 13 March 2024, the Company hereby provides an operational update for the five months ended 31 May 2024 (“the period”).

Progress continues to be made in achieving the Group’s key priorities for FY2024 set out in the HY2024 interim results. In line with our strategic objectives, the acquisition of Table Bay Mall was implemented on 28 March 2024, increasing the Group’s exposure and footprint in the Western Cape, and internal approvals have been obtained to expand Somerset Mall by an additional 5 400m2 of GLA. The risks associated with the Group’s investments in Nigeria remain elevated, however, progress is being made with the disposal of the Group’s investments in sub-Saharan Africa (“SSA”), as noted below.
The Group’s operational performance continued to improve steadily over the period, with all portfolios showing improvements in key trading metrics. These improved trading metrics are attributed to the repositioning strategy in South Africa (“SA”), the good tenant mix and increased footfall across the SA and Eastern Europe (“EE”) portfolios, and improved asset management in the SSA portfolio.

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Redefine Properties, a landlord listed on the Johannesburg Stock Exchange (JSE) with a diversified property portfolio valued at about R100.4 billion, is investing capital expenditure worth R45 million in Mall of the South (MOTS) as it looks to generate additional value from the recently acquired retail asset.

Located in the heart of southern Johannesburg in the affluent suburb of Aspen Hills, the 68,168sqm Mall of the South offers optimal exposure and convenient access from two main arterial roads, Kliprivier Drive and Swartkoppies Road, that border the mall.
“Mall of the South, with a varied retail offering of 160 stores as it stands, is a key asset that is situated in a node where it is the dominant retail offering,” says Nashil Chotoki, National Asset Manager at Redefine. “It’s an asset that is accretive for our portfolio, from an investment return perspective.”

Chotoki adds that future residential development within the node will further improve MOTS’s performance and dominance.

Redefine is investing R38 million in capital expenditure to develop available bulk land for two fast-food drive-throughs that will supplement the mall’s existing fast-food offering, as well as a tyre fitment centre.

In conjunction with the drive-throughs, Redefine has engaged the taxi associations and relevant local authorities, such as the Gauteng Department of Transport and the Johannesburg Roads Agency, to construct a taxi rank on the mall’s premises.
Currently, commuting customers are dropped off on Swartkoppies Road and walk to access the mall. The new plan allows for customers to be dropped off inside the mall’s perimeter after the taxi rank is moved, improving access and providing a more convenient option for commuter shoppers.

Chotoki says the expected completion of the taxi rank relocation is dependent on the Gauteng Department of Transport’s approval.

Redefine has taken advantage of the opportunity provided by Game leaving MOTS with the addition of Shoprite which officially opened in May 2024. This is in keeping with its strategic focus on increasing its exposure to the essential services category, which is currently experiencing growth and capturing the most consumer spend.

According to Chotoki, this reconfiguration will draw in a different kind of customer that is looking for value and essential offerings, increasing foot traffic in the mall. “The relocation of the taxi rank contributes to the success of enabling the value offering,” he continues.
Redefine is also working with existing retailer Incredible Connection, a reputable retailer backed by Pepkor, to enlarge the store space to cater to the electronics gap left by Game’s vacancy.

“We are continuously lowering our exposure to and right-sizing underperforming tenants as part of ongoing leasing strategies. We’re also introducing new retailers that are entering the market to MOTS’s tenant mix.”
The remaining R7 million capital expenditure will be used to consolidate the fast-food offering into a single food court, as well as expand the existing restaurant area onto an expansive outdoor deck that aims to improve the overall ambience and dining experience. As it stands, food outlets are scattered across the premises.

Redefine is working to switch the entire mall to backup power integrated into the current solar PV plant to lessen reliance on municipal services and guarantee consistent operation of the asset. This integration will lower operating expenses and diesel consumption while also limiting business disruption.

MOTS has one of the largest solar PV plants in the Redefine portfolio at 5.2MwP, which provides approximately 25% of annual energy requirements.

“MOTS continues to see strong demand and high levels of footfall, which is consistent with the rest of the malls in our retail portfolio. This confirms that South African consumers still value the physical shopping experience.”
Around 34% of shoppers sit in the high-income category and, therefore, contribute to a higher basket of spend, comparatively. Following the value-focused adjustments and addition of a value-focused offering, Redefine hopes to make the mall’s offering more diverse and inclusive to all income levels.

Mall of the South’s current valuation (R1.8bn) is in line with its purchase value. According to Chotoki, the planned additional capital expenditure will increase the asset’s value even more.