SAREIT

Rosebank, South Africa, 20 July 2020: JSE-listed diversified Real Estate Investment Trust Redefine Properties (JSE: RDF) has appointed Diane Radley to its board of directors as an independent, non-executive director with effect from today. The appointment of Ms. Radley is in line with Redefine’s stated intention of strengthening governance and board independence, broadening diversity and bolstering skills on its board.

A qualified Chartered Accountant (SA), Ms. Radley is an alumnus of Rhodes University and holds an MBA from the Wits Business School as well as an AMP from Harvard.

Ms. Radley has international experience both in her executive capacity and as a non-executive director. Her extensive board experience includes her roles as chairperson of the Marriot Unit Trust Company (Pty) Ltd, non-executive director at Transaction Capital Ltd, Murray & Roberts Holdings Ltd and Base Resources Ltd in Australia. She was previously a non-executive director at Old Mutual Real Estate Holding Company Ltd.

She led the Transaction Services Group at PwC which focused on due diligence and valuations on transactions for private equity funds, investment banks, strategic buyers, corporate acquirers and other equity providers prior to joining Altron as their CFO in 2001.

In 2010 after a three-year term as group finance director of Old Mutual (Emerging Markets) she was appointed CEO of Old Mutual Investment Group until the end of 2016. In this role she was responsible for the property business and continued as a non-executive director on the board of Old Mutual Real Estate Holding Company after leaving Old Mutual.

“We are delighted to welcome Diane to the board and look forward to working with her. Given her broad investment, real estate and board experience, she will be an invaluable resource as we continue to execute our strategy in a particularly challenging environment,” says Sipho Pityana, Chairperson, Redefine Properties.

Redefine’s gender diversity policy promotes a voluntary target of 40% female representation on the board over a three-year period, while the racial diversity policy promotes a voluntary target of 50% black representation on the board over the same period.

Ms. Radley’s appointment takes Redefine’s female representation on the board to 60%.

“Diane’s appointment furthers our efforts to benefit from fresh and diverse perspectives from our independent directors,” concludes Sipho.

Cape Town, 14 June 2020. Fairvest Property Holdings Limited (“Fairvest”) today announced the finalisation of the due diligence for its disposal of Tokai Junction, a 7 618m2 retail centre in Constantia, Western Cape to FPG Holdings Proprietary Limited for R180 million. Chief Executive Officer, Darren Wilder said: “the disposal value of R180 million represents good value for Fairvest. The disposal price represents a 2.1% premium to book value at 31 December 2019 of R176 million, which in a market where valuations are predicted to fall by as much as 20%, confirms that Fairvest’s property valuations are not over-valued.”

The proceeds will be used to pay down debt, in line with Fairvest’s strategic objective of ensuring that its balance sheet remains robust in a tough economic environment. To complete a transaction of this nature in the current environment demonstrates the attractiveness of Fairvest’s assets, as well as its ability to recycle capital when equity becomes expensive.

The only remaining condition outstanding is that of competition commission approval.

Growthpoint Properties is the Overall Winner of the Investment Analysts Society of South Africa (IAS) Excellence in Financial Reporting and Communications Awards 2019 and was also voted as the leader in communication and financial reporting in the property sector category.

These awards are earned by companies displaying excellence in transparency, financial disclosure and communication with members of the IAS and the investment community. The rigorously selected award winners were announced by the IAS this week.

The IAS represents investment professionals throughout South Africa who play a key role in investor communication and investment decision-making. The society regularly canvasses their opinions on which public companies they believe have excelled in displaying outstanding expertise and transparency in financial disclosure and communications.

Growthpoint has been acknowledged for its excellent disclosure and quality market intelligence by the IAS every year since 2011. It has also been named Overall Winner of these awards three times, demonstrating its consistency in best practice reporting and setting a commendable benchmark.

Norbert Sasse, Group CEO of Growthpoint Properties, comments, “These awards underscore Growthpoint’s commitment to providing accurate, meaningful and timely information to the market. We are thrilled to receive the overall prize for the third time and honoured to accept the property sector award. While this is not the first year we have won both awards, it is one of the most memorable and rewarding as every year the competition gets tougher and the bar gets set higher. Growthpoint has an incredibly talented team who drive the success of our financial reporting and communication, and who can be incredibly proud of their achievements.”

He adds, “We are especially pleased that the quality of our governance, communication and reporting has been acknowledged by the analysts of the IAS, which is a valued endorsement from the investor community indeed. These awards are assurance of the high quality of information provided to analyse our company.”

As a leading international property company, Growthpoint aims to create a rich understanding of its investment story and long-term sustainability, and takes great care to ensure high levels of corporate governance. It is fixated on clarity, reliability and relevance when showing how it provides value to stakeholders and how it contributes to South Africa’s society and economy.

Sasse notes, “We know that providing information swiftly is essential for the key stakeholders in our business, and we make it a priority to share excellent insight into all aspects of our business. This discipline stands us in good stead at this unprecedented time. We believe, no matter what the operating conditions, it is important to communicate our investment strategies and objectives with the market. Growthpoint remains dedicated to excellent standards in our financial reporting and to communication that gives a full and accurate picture of our business. We will carry on engaging with our stakeholders actively and openly.”

Growthpoint creates space to thrive with innovative and sustainable property solutions. It is South Africa’s largest primary JSE-listed REIT and is invested in real estate and communities across Africa, Europe, UK and Australia.

In April 2020, Growthpoint and Serra® Services achieved the first Green Star Existing Building Performance (EBP) rating for an industrial building in Gauteng, with a 5-Star certification for a 7400sqm facility in Meadowbrook, Germiston.

Situated in a mixed industrial and residential area in the east of Johannesburg, the light manufacturing building, comprising a workshop and offices on two floors, is owned by Growthpoint Properties and was leased by Serra® in 2016. An extensive process was undertaken by both landlord and tenant, in consultation with Solid Green Consulting, to achieve this Green Star EBP ‘first’.

Paul Thomaz, Group Marketing Director of Serra®, says that, as a leading hygiene service provider and washroom dispenser manufacturer, Serra is duty bound to highlight health and sustainable environmental practices as they become more relevant for everyone. “From the outset, our discussions with Growthpoint hinged on our mutual determination to regard sustainability as a joint core value. This is in keeping with Serra’s all-encompassing philosophy and long-term vision of ‘no harm’, and our commitment to applying best international practice in reducing our overall carbon footprint.

“As the first Industrial sector site to receive this recognition in Gauteng, Serra® has achieved another milestone in a history of numerous ‘firsts’ both in our industry and in the broader South African context. We are especially proud of this achievement as we are celebrating our 35th anniversary this year.”

Errol Taylor, Head of Asset Management: Industrial at Growthpoint Properties, remarks, “It is interesting to note that this small but prominent corner of Meadowbrook has become a shining example of green building in South Africa. Serra’s premises are directly adjacent to Growthpoint’s award-winning 5-Star Office Design v1 certified Grundfos development.

“The EBP certification for the building occupied by Serra is part of a pilot programme to develop an industrial EBP rating tool for the GBCSA, which can be used by everyone in the industrial property sector. Growthpoint works in close collaboration with our clients and professional teams to achieve optimal environments for occupants while ensuring that our buildings operate efficiently, sustainably and with minimal impact on the environment. We believe it is important to certify our green buildings because a recognised building rating provides an important independent verification of environmental performance.”

Dashiell Coville, Sustainable Building Consultant at Solid Green, explains that the GBCSA’s Existing Building Performance (EBP) tool focuses on the operational phase of an existing building’s lifecycle, to enable facilities management to set in place policies, plans and processes to optimise the operations and performance of the building. “The certification process for industrial buildings requires a lot more tenant engagement than for office buildings, as industrial tenants are typically in charge of all aspects of property management and cannot simply gain credit from the landlord’s green policies.”

Key features of the Meadowbrook building’s performance include energy and water efficiency. “Serra consumes in the region of 16kWh/sqm/year, which is an 85% improvement on a typical light industrial building of this scale (106kWh/sqm/year),” says Coville. “This is the ongoing targeted consumption level. Thanks to reduced consumption, as well as energy efficiency and the renewable energy initiatives implemented, the consumption in 2019 was lower than in 2018.”

A large solar photovoltaic system on the roof provides renewable energy to the facility. 130 panels, with a capacity of 25kWp, were installed as phase 1; and Thomaz advises that the aim is to install a further 110 panels for phase 2 – with capacity for 550 panels in total. He adds, “Three lithium-ion battery banks provide the office component with 24 hours of uninterrupted power. In winter – June through to end August – these are bled during peak load periods (06h00-09h00 and 16h00 to 18h00) to reduce our electricity consumption and carbon footprint.”

Thanks to the water saving initiatives implemented as well as the efficient habits of the Serra staff, the facility has demonstrated an 88% improvement in water consumption on a typical light manufacturing industrial building of this scale, and this is the ongoing targeted consumption level.

The Serra building uses cutting-edge energy and water monitoring systems to accurately report on consumption. Data is monitored via online dashboards and used to analyse trends and highlight problem areas; and the utility metering process is outsourced to a specialistcontractor who manages meter reading and processing.

Periodic audits and occupant surveys are carried out to ensure that sufficient fresh air is provided (to meet or exceed national design standards), that lighting levels are optimal, and that temperatures are comfortable. This all translates into a healthier, more productive space.

Taylor says that the current global COVID-19 pandemic has clarified the importance of work settings that have a positive impact on the health of people and the environment. “As people slowly return to their desks and workbenches after the hardest levels of the COVID-19 lockdown, the design and operation of workspaces to safeguard occupant health and wellbeing will undoubtedly become the priority for all responsible businesses. Factors such as good ventilation and air quality are going to be the defining features of healthy workspaces.

“Certified green buildings are certainly among those best positioned to provide superior healthy working environments. In addition, energy and water savings translate to valuable cost savings, which will be more important than ever to businesses as they focus on recovering from the impacts of the COVID-19 crisis.”

Serra is constantly reviewing its approach to recycling within the building in order to improve its waste management practices. The goal is to integrate recycling both at a manufacturing and operations level. Recycling bins for paper, glass, plastics and aluminium cans will be situated within the office space as well as the warehouse waste storage area and collected weekly by the waste management contractor. Thomaz explains that the 3R principle has been implemented. For example, all bonded paper is reused or repurposed where possible in printers, and then recycled after shredding as product bulk packaging. And all stainless-steel offcuts are either repurposed or recycled (if not fit for purpose) – resulting in a wastage factor of less than 2%.

An extensive Building User’s Guide was developed for the facility’s ongoing operations, which includes recommendations around several factors to provide the most efficient, healthy and enjoyable working environment. These include indoor emissions; choice of materials and finishes; and design considerations such as thermal comfort, ventilation, daylight, internal noise levels, and the provision of quiet spaces.

Marloes Reinink, director at Solid Green Consulting, notes that it has long been widely acknowledged that the management of buildings is critical to enhancing users’ health and wellbeing – both in terms of productivity, and mitigating disease and absenteeism. She emphasises, “As the links between sustainable practices and public health become more apparent, building professionals and their clients will need to be proactive in navigating the way forward. We must work together towards creating sustainable buildings that are enablers of health.”

With its recent EBP certification, Serra® has set a new benchmark for owners and users of Africa’s existing industrial building stock – proving that a more efficient and responsible way of operating is both possible and necessary.

Vukile Property Fund today reported its annual results with 3.2% growth in distributable earnings per share for its financial year to 31 March 2020

Laurence Rapp, CEO of Vukile Property Fund, notes Vukile achieved strong performance in both its South African and Spanish portfolios. Its defensive portfolio of nodally dominant shopping centres continues to fare well, and Vukile’s strongly cash-generative assets position it favourably for the future.

Rapp comments, “Vukile had a very strong year and has delivered a stand-out set of results. Operationally, our portfolios in both Spain and SA are in excellent shape and achieved all key targets and metrics.”

JSE-listed SA retail REIT Vukile has 52% of its assets in Spain through its 82.5% held subsidiary Castellana Properties SOCIMI SA. Castellana reported an impressive retail performance with vacancies contained at a low 1.8%, a
10.8% growth in rentals on renewals and new lets, and a 99% rental collection rate. Castellana has a blue-chip tenant mix with 93% of its rentals coming from international and national tenants.

The SA portfolio delivered another solid performance, with Vukile’s asset management core competency adding value against the backdrop of a worsening economy. Like-for-like trading density growth of 3.4% was boosted to 5.1% with asset management interventions, specifically the successful redevelopment and launch of the Pine Crest and Maluti Crescent centres. Vukile’s SA retail vacancies were a low 2.9%. It achieved an impressive 84% retail tenant retention with positive reversions of 1.1%, and 6% like-for-like net income growth from its retail centres.

With the advent of COVID-19, Vukile took a disciplined approach with its primary focus being the health, wellbeing and safety of customers, tenants and staff. Leading virologist Professor Barry Schoub was appointed as a special advisor to Vukile to develop hygiene protocols for its retail centres in SA and Spain resulting in immediate, high-impact interventions that make its shopping centres safe and welcoming.

In line with new COVID-19 curbing protocols, both Vukile and Castellana increased spending on cleaning, sanitising, PPE, staff training, signage, social distancing markers and awareness campaigns to ensure the operational excellence necessary to create sanitised, comfortable and conducive environments for tenants and customers alike.

Vukile adopted a cooperative approach in working with tenants to manage the impact of the lockdown. Rapp comments, “Now is the time for responsible corporate leadership and working together in a cooperative way to stabilise the industry and economy.” In SA, Vukile played a leadership role in the Property Industry Group and adopted its relief guidelines. It offered R108m in relief to tenants for the three months from April to June, of which a considerable R49m is helping to sustain small, medium and micro-enterprises, which make up only 20% of the portfolio. Vukile has already concluded deals with all but one of its top 20 tenants, representing some 56% of its rental income, which will all be paying full rentals from June.

In April, during the hard lockdown in SA, Vukile’s shopping centre footfalls were around 32% of the prior year’s number and increased to 70% in June. Township, commuter, rural and value centres, which comprise 81% of Vukile’s SA portfolio, have outperformed their urban counterparts and are leading the country’s retail recovery. By the end of May, trading densities were ahead of May 2019. Castellana successfully re-opened its shopping centres in Spain in the final week of May and the centres indicate trading at about 65% of their pre-COVID-19 footfalls, but customer conversion rates and spend per head seem to be increasing, pointing to a relatively lighter impact on sales.

The COVID-19 lockdowns have accelerated inevitable changes in the retail landscape and fast-tracked the rate of change in the physical shopping experience. Vukile is embracing the many opportunities offered by this evolution. “As a value-add partner for retailers, besides providing leading dominant shopping centres with extremely strong trading environments, we have also increased our customer analytics capacity to add further value to our tenants,” notes Rapp.

Vukile has run various detailed scenarios focused on solvency and liquidity, and all confirm the underlying health of its balance sheet and business. It can comfortably meet all its debt requirements in SA and Spain, with an interest cover ratio of 5.8 times. Vukile benefits from diversified funding sources and has engaged actively and transparently with funders during the COVID-19 crisis and has already refinanced 77% of debt maturing in FY21.

Rapp points out that the current crisis and extreme volatility in REIT share prices has highlighted the disconnect between the long-term and more stable nature of fixed property as an asset class and the performance of REITs as financial instruments. This has led to unhealthy short-termism in the sector. “We are resolved that Vukile’s future will be distinguished by excellent bricks-and-mortar fundamentals, our passion for retail, a strong balance sheet, lower and more prudent dividend pay-out ratios and continued emphasis on long-term sustainability.”

The remainder of 2020 is likely to be very challenging for business in general. However, 2021 is forecast to bring a strong retail rebound in Spain. The return of shoppers and sales with the lifting of the hard lockdown in both SA and Spain is outperforming initial expectations, which is encouraging.

Vukile has deferred the declaration of a final dividend for FY20, pending the outcome of industry-wide consultation with the JSE and National Treasury. “Further, given the material uncertainty in the market, it is too early for Vukile to provide dividend guidance for FY21 or commit to paying an interim dividend for FY21,” reports Rapp. “Vukile is in good shape operationally, financially and as a sustainable long-term going concern. Our diversified portfolios in SA and Spain with strong, dominant shopping centre assets and compelling trading metrics are the cornerstone of our strength and favourable market position”.