Archives for March 2025

Office parks reimagined

Office parks reimagined: When sustainability meets market leadership

By Samantha Lambert, General Manager, Redefine Properties

In an era of unprecedented environmental and operational challenges, South Africa’s office parks stand at a critical juncture. Energy insecurity, water scarcity, and ageing municipal infrastructure are no longer distant concerns but immediate challenges that demand innovative solutions. Yet, within these challenges lies an opportunity to reimagine office parks as beacons of sustainability and operational resilience.

The business imperative for sustainable office parks

Sustainable office parks are no longer just an environmental consideration; they are a business imperative. Unreliable municipal power supply and recurring water shortages directly impact operational continuity and tenant satisfaction. Simultaneously, tenants and investors increasingly demand spaces that combine operational resilience with environmental responsibility. This convergence of operational necessity and stakeholder expectations is reshaping how we approach office park development and management.

Black River Office Park in Cape Town’s Observatory district exemplifies this transformation. The park’s evolution has been accelerated by significant node activation, including Amazon’s new head office development across the way. This strategic location, with its superior road infrastructure connecting to both northern and southern suburbs, has catalysed the area’s development into what we envision as an emerging Century City-calibre node.

Infrastructure that powers performance

Leading sustainable office parks are distinguished by infrastructure investments that address both environmental impact and operational resilience:

  • Renewable energy systems: Black River’s solar fleet, with an installed capacity of 1,496 kWp supported by 5,715 panels, significantly reduces grid dependence while ensuring consistent power supply.
  • Backup power solutions: A comprehensive backup generator system, coupled with a centralised power plant, ensures business continuity during grid interruptions – a critical feature that’s no longer optional but essential for tenant operations.
  • Water security measures: Strategic use of borehole water for refuse yards and irrigation supports water-wise landscaping, reducing municipal water dependence while maintaining attractive green spaces.

These investments deliver measurable returns through reduced operating costs and enhanced tenant satisfaction. The park’s near-full occupancy demonstrates the strong market demand for sustainable, resilient office space.

The multi-tenant advantage: How diversity drives growth

Sustainability extends beyond utility management to encompass how spaces support diverse business needs. Black River Office Park comprises 14 distinct buildings, each with its own identity, enabling a unique ecosystem where corporate offices and business process outsourcing (BPO) operations successfully coexist. As we’ve discovered, sustainable office parks must be flexible enough to accommodate varying density requirements while maintaining premium-grade standards.

The park’s design thoughtfully incorporates energy-efficient building systems alongside carefully planned green spaces that enhance both environmental performance and user well-being. Supporting amenities promote tenant productivity and satisfaction, while flexible spaces readily adapt to changing business needs.

This approach has attracted a diverse tenant mix, including boutique gyms, award-winning salons, medical practices, and varied food offerings. As a result, it has created a vibrant, community-centric environment that supports approximately 2,000 employees, a number set to double with recent expansions.

Collaboration: The key to sustainable success is collaboration

Achieving meaningful sustainability requires close collaboration among REITs, tenants and vendors. At Black River, this collaborative approach begins with our tenants, working closely with them to optimise space utilisation and resource efficiency. We engage suppliers in sustainable procurement practices while maintaining strong partnerships with the City of Cape Town and CapeBPO to align with regional development goals. Our Red Thread initiative exemplifies this collaborative spirit, repurposing materials from gutted buildings to benefit the community and demonstrate our commitment to circular economy principles.

Smart design, smarter returns

Modern technology plays a crucial role in maximising sustainable infrastructure performance. At Black River, we’re investing in smart building systems for resource optimisation, complemented by advanced monitoring tools for energy and water consumption. Our commitment to continuous assessment of environmental performance drives strategic upgrades that maintain our premium-grade status.

The planned redevelopment of Gate House, which anchors the entry point to Black River Park, illustrates our commitment to ongoing evolution. This project will enhance the building’s exterior while maintaining its distinct character, demonstrating how sustainable design can complement heritage features.

Market leadership through environmental excellence

As South Africa continues to face environmental and infrastructure challenges, sustainable office parks will play an increasingly vital role in our business landscape. The success of Black River Office Park demonstrates that sustainability isn’t just about environmental responsibility; it’s about creating resilient, future-ready spaces that deliver lasting value for all stakeholders.

Property owners and managers must take a long-term view, balancing immediate operational needs with future sustainability requirements. This means investing in robust infrastructure, fostering collaborative ecosystems, and maintaining unwavering commitment to continuous improvement.

The future belongs to office parks that can adapt, evolve and thrive in the face of change. Embracing sustainable practices today not only protects our environment but also ensures the long-term viability of our assets. At the same time, it creates spaces where businesses can flourish for generations to come.

Olympus Sandton achieves stratospheric sales success

The landmark Olympus Sandton residential and retail development has achieved a phenomenal R940 million in sales just days after its luxury apartments were launched for public purchase on 27 February 2025, with 295 apartments sold by the close of the public sales launch weekend.

Olympus Sandton is being developed by Growthpoint Properties (JSE: GRT), South Africa’s leading real estate investment trust (REIT), in partnership with Tricolt, a premier developer specialising in high-end residential projects. It is the latest development in Sandton Summit, where Growthpoint is shaping its vision to create South Africa’s premier walkable mixed-use precinct. At the high-profile junction of Sandton/Katherine Drive and Rivonia Road, Sandton Summit is anchored by Discovery’s iconic head office building (co-owned by Growthpoint 55% and Zenprop 45%). Adjacent to this landmark, along Rivonia Road, the Olympus Sandton high-rise residential development will elevate fine living in vibrant Sandton, setting a new benchmark with 512 state-of-the-art apartments across its two towers.

The development’s first 24-storey residential tower, The Athena, is nearly sold out with 227 of its 288 apartments already secured by eager buyers.

Tim Kloeck, Chairman of Tricolt reports, “Olympus Sandton sales are exceeding all expectations. In response to the overwhelming demand, we are pleased to announce the immediate release of apartments for sale in the second tower, The Apollo. Tricolt brings its expertise in world-class residential living to this landmark project.”

The first 68 of The Apollo’s 224 apartments were snapped up swiftly on release.

Neil Schloss, Head of Asset Management: South Africa at Growthpoint Properties, adds, “The exceptional sales momentum has accelerated the Olympus Sandton development timeline, and we can confirm that construction of both towers should commence in the latter part of 2025 and early 2026. The development’s sales success exemplifies Growthpoint’s strategic approach to unlocking maximum value from prime real estate assets through strategic, market-aligned development and partnerships.”

Kent Gush from Kent Gush Properties states, “I have been selling property for 40 years in Sandton and Olympus has been the most incredible success story of my career.”

Olympus Sandton offers a variety of premium residences, with prices ranging from R1.49 million to R7.2 million for studios and one- and two-bedroom apartments. Penthouses are available from R14 million to R45 million.

The sales team notes that buyers report Olympus Sandton’s most compelling features are its prime position in vibrant Sandton Summit, offering effortless connectivity, premier amenities and a dynamic neighbourhood. Also enticing buyers is Olympus Sandton’s 360-degree skyline splendour with unmatched views across Johannesburg from the 24-storey tower, which will become the highest point in Sandton. Olympus Sandton’s elevated dining from Marble Hospitality Group, served with the breathtaking panoramas from around The Athena’s entire 18th floor, is a distinctive drawcard, as is the next-level ground-floor curated fancy foodie grocery experience from Pantry by Marble.

Beyond location and lifestyle, Olympus Sandton is a design icon — a landmark envisioned by award-winning Architects Clark Hopkins Clark. With cutting-edge, eco-friendly design, it redefines green luxury, offering smart, sustainable living at its finest.

Spear REIT FY2025 Pre-Close reflects a transformative year

Spear REIT Limited (JSE:SEA), the Western Cape-focused real estate investment trust has provided an operational and financial update in its FY2025 pre-close presentation for the period ending 28 February 2025. Spear REIT’s FY2025 stands out in the sector due to its strategic focus and consistent robust financial metrics. The company reported a 13.58% year-on-year increase in portfolio value, reaching R5.26 billion assets under ownership, and maintained a high occupancy rate of 96.02% with a further 100bps increase in occupancies since HY2025. The company remains on track to deliver on its objectives and forecast, reporting impressive performance metrics and continued portfolio growth.

Highlights

  • Portfolio value: 26 billion, reflecting a 13.58% increase year-on-year
  • Market capitalisation increase of 5 billion to R 3.3 billion
  • Loan-to-value (LTV) ratio: 97%
  • Interest coverage ratio (ICR): 34 times
  • Fixed debt ratio: 18%, with an average debt expiry of 24 months
  • Proposed final payout ratio: 95%
  • Portfolio occupancy rate: 02%

At the pre-close presentation, Spear’s CEO, Quintin Rossi, noted: “FY2025 has been a transformative year for us, driven by the success of the new Western Cape portfolio acquisition. Thanks to our regional operating strategy, the portfolio has been successfully stabilised into the core portfolio ahead of schedule and under budget. Our commitment to the Western Cape real estate market has resulted in sustained portfolio growth, high occupancy levels, and strong cash collections.”

Portfolio and operational performance

  • Occupancy:02%, supported by a strong tenant retention strategy
  • Portfolio in-force escalations:34%
  • Renewals and new lets: 86,359m² concluded versus 84,620m² expiring
  • Cash collections:78% year-to-date
  • Rental reversions: Portfolio-wide positive reversion of 52%

CFO Christiaan Barnard added: “Active capital recycling and disciplined financial management have bolstered our balance sheet, ensuring a resilient and sustainable capital structure. Our lower cost of debt and risk mitigation strategies continue to support our financial stability which has been a positive contributor to overall performance during the year.”

Spear has successfully implemented a R1.15 billion portfolio acquisition, significantly enhancing its asset base and bolstering its market presence with this accretive 93 500m2 diversified portfolio acquisition. “With an entrepreneurial management team that remains laser-focused on active asset and portfolio management, the Spear investment team is looking ahead towards the new financial year with approximately R1 billion in new acquisition opportunities currently under review, positioning the company for continued and sustained growth”, announced Rossi

Spear’s organic development pipeline is set to add future value to the core portfolio, with strategic projects aimed at expanding its industrial and mixed-use asset base. The GTX Park in George, a 30,000m² industrial development, is progressing with a total capital investment over 5 years of R400 million. Bravo Park in Blackheath is set to expand to Phase 2 by 7,000m², with an R82 million capital investment. Meanwhile, the Marine Drive mixed-use development in Paarden Eiland, anticipated to commence the rollout in phases, will require a total capital investment of R1.5 billion over five years.

Sustainability remains a core focus, with over 60% of the portfolio now equipped with solar PV infrastructure. Ten new solar PV systems are scheduled for installation, following the acquisition of the new portfolio. Furthermore, Spear is exploring wheeling projects within the City of Cape Town to enhance energy security and resilience across its portfolio.

Outlook for FY2025

Looking ahead, Spear remains focused on growth, value creation, and sustainable operations. Management reaffirmed its full year guidance of distribution per share (DIPS) growth of between 2% and4% for FY2025 while maintaining a 95% payout ratio.

Rossi concluded: “With strong leasing momentum, solid regional real estate fundamentals, an enhanced portfolio, and our disciplined financial approach, we are confident in our ability to navigate evolving market dynamics and deliver sustained value to our stakeholders in line with our mission statement.”

Spear will release its results for the full year FY2025 on 22nd May 2025.

Redefine navigates uncertainty with focus on organic growth

Redefine Properties (JSE: RDF) announced in its pre-close investor update for the half-year ending 28 February 2025 that its earnings outlook has stabilised despite a challenging operating context, driven by a focus on efficiency and strong demand for quality assets.

The company reported that its South African portfolio achieved a net operating profit margin of 77.8%, while EPP, its directly owned Polish retail property platform, improved its margin from 66.4% to 71.7%. This led to a consolidated group net operating profit margin of 75.9%.

Redefine CEO Andrew König highlighted that the global path to economic normalisation has been disrupted by changes in US policy under President Donald Trump, which introduced uncertainty around interest rates and inflation. “The stage is now set for a shallow easing cycle, and rates may not reach the levels we previously expected. While European interest rates continue to trend downward, escalating geoeconomic tensions cloud the 2025 outlook. To sustain growth in valuations, we cannot rely solely on interest rate movements. Our strategic focus remains on organic income growth, as this will drive value creation in the current market.”

Looking ahead, Redefine’s strategy is focused on disciplined capital allocation, the sale of non-core assets to reduce its loan-to-value ratio, restructuring joint ventures to enhance visibility of income streams, whilst delivering income growth. König noted that commercial real estate transactional activity is on the rise, which will support the company’s plans to offload non-core assets, with growing interest in the market.

Despite the disruption caused by the delayed national budget speech, König pointed to two promising initiatives from the National Treasury: efforts to remove South Africa from the greylist by October and the restoration of the country’s investment-grade credit rating. “This is critical for our business, as Redefine’s Moody’s rating was downgraded alongside South Africa’s. A reversal of this could improve access to international debt markets, and the delayed budget may even help with these efforts.”

 Green shoots in the SA portfolio

 Redefine’s South African portfolio has demonstrated solid performance, particularly in the industrial and retail sectors, which drove a 1% increase in overall occupancy since August 2024. Additionally, 80% of renewals were completed at stable or increased rental terms, a positive indicator of growth.

The industrial sector has proven especially resilient, with occupancy rising to 97.6%, alongside positive rental reversions in a competitive market. “The industrial sector continues to be one of our strongest performers, and we see potential for further growth if capital availability allows us to expand,” said Leon Kok, Redefine’s COO.

Conversely, the office sector remains challenged by excess supply and limited demand, except in select nodes. A significant lease renewal resulted in a -17% renewal reversion during the period. However, Redefine mitigated this impact through strong leasing activity in other locations, such as the Western Cape and Sandton, which benefit from proximity to the Gautrain. “Demand is focused on high-quality assets, and our active asset management ensures our portfolio remains well-positioned to attract this limited demand,” Kok added.

Sustainability commitments

 Redefine is making notable strides towards its sustainability goals, with an ambition to become the most sustainable property company by 2030. The company plans to expand its renewable energy capacity by 47%, with an anticipated 17% of energy consumption coming from renewable sources by year-end. Additionally, Redefine has achieved a 38% reduction in greenhouse gas emissions across its European portfolio, further solidifying its commitment to environmental sustainability.

The company also received recognition from Sustainalytics, earning three badges, including being ranked the 16th most sustainable global real estate company, the only South African REIT to place among the top 50 worldwide.

Growth in Poland

 While South Africa faces ongoing challenges, Poland’s economic growth has benefited from European interest rate cuts and social grants that have boosted household spending and retail conditions. EPP’s core properties have seen impressive occupancy levels of 99.3%, with rental reversions rising from 0.2% to 1.5%. The rent-to-sales ratio remains well below 9%, indicating healthy tenant affordability.

Redefine is pursuing a strategy of selling non-core assets and restructuring joint ventures in Poland to reduce complexity and lower the see-through LTV. “We are exploring options to simplify our joint ventures to either exit or fully own them,” König explained.

 Strong cash generation

 Redefine’s financial position remains strong, with a liquidity profile of R6.4 billion as of November 2024. The company has also proactively managed its debt profile, including the FY25 maturities that are progressing well on the back of improved liquidity levels in the capital markets. As of February 2025, Redefine’s weighted average cost of debt decreased to 7.2%, providing some relief amid global inflationary pressures.

Ntobeko Nyawo, Redefine’s CFO, emphasised, “Our focus continues to be on generating organic growth from our existing portfolio, maintaining a strong balance sheet, and weathering the current economic cycle. We are positioning the company to capture opportunities in high-quality assets, while ensuring strong cash generation to support our dividend payouts.”

Looking ahead: Living the upside

Redefine enters 2025 with a focus on “living the upside,” aiming for sustainable, long-term value creation. König concluded, “While some macroeconomic factors, including US policy shifts, remain unpredictable, we are confident in our ability to create our own upside and deliver on our strategic goals.”

Despite macroeconomic challenges, the company is maintaining its earnings guidance for FY25, with distributable income per share expected to be between 50 and 53 cents.