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Redefine unveils newly expanded Pan Africa Mall

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Redefine Properties unveils newly expanded Pan Africa Mall

 Johannesburg, November 2024 – Redefine Properties, South Africa’s listed real estate investment trust (REIT), has officially opened the newly expanded Pan Africa Mall. The expansion added 9,000sqm of additional retail space, increasing the mall’s total gross lettable area (GLA) to over 25,000sqm. The mall is co-owned by Redefine Properties and Talis Property Fund.

Pan Africa Mall, located in Alexandra, underwent a significant upgrade, offering a wider range of stores and restaurants for the community. The centre now features a new upper-level floor for fashion retailers, including the relocated Mr Price and Ackermans stores, and an extended ground floor, which includes a new Roots Butchery, an expanded Truworths, and an FNB branch. Notable new tenants include W.Edit, Sportscene, Pick n Pay Clothing, Jam Clothing, Hungry Lion, Vision Works, The HUB, Selfast, Nizams, Clothing Junction, and Tekkie Town.

Andrew König, Chief Executive Officer at Redefine, says, “The expansion of Pan Africa Mall is a major milestone for both Redefine and the Alexandra community. By creating opportunities for local businesses and investing in sustainable solutions like solar power, we are contributing to the area’s economic growth while ensuring the centre serves the community for years to come.” The new expansion reflects Redefine’s vision to enhance the retail experience and collaborate with the Alexandra community towards collective growth.

Pan Africa Mall’s environmental, social, and governance (ESG) credentials will be improved as the upgrade incorporates full back-up power and water – including the exploration of sinking a borehole, a R12.2 million solar photovoltaic (PV) system with an 851kWp capacity, and the installation of energy-efficient lighting and water efficient toilets. Including these ESG measures into the centre’s operations is vital to Redefine’s commitment to sustainability, enhancing customer loyalty, and future-proofing the shopping area, helping the community it serves.

Tebogo Mogashoa, Chairman of Talis Property Fund, adds, “As investors deeply committed to Alexandra, Talis Property Fund sees this expansion as more than just retail growth – it’s an investment in the social fabric and economic future of the area.

“We have seen how the Pan Africa Mall has evolved into a welcoming space that fosters strong community connections, where families, small businesses, and social partners come together. Building on a foundation of trust, our partnerships remain instrumental in creating lasting value, reflecting the strength of collaboration in stimulating local economic development.

“We’re grateful to our social partners who have played a central role in helping us realise this vision.”

In a pioneering initiative, the centre was the first of its kind in South Africa built with fully integrated public transport, which includes a 50,000sqm taxi facility. Street hawkers are now being offered permanent stalls – managed by the Alexandra Taxi Association. Redefine is committed to growing smaller businesses and improving the area for customers.

“This project is about more than just expanding a shopping centre. It is about empowering local businesses and driving urban renewal in Alexandra. Redefine is committed to creating lasting value for the community and shaping a sustainable future for South African cities,” König concludes.

Redefine Properties reports solid financial results for FY24

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Redefine Properties reports solid financial results for FY24: A pivotal turning point for the property sector

Johannesburg, 4 November 2024 – Redefine Properties (JSE:RDF) has reported solid improvements across its key operational metrics for the financial year ending August 31, 2024. This year has marked a crucial turning point for the property sector, as easing interest rates and increasing confidence are leading to better property fundamentals and a more favourable operating environment.

Andrew König, CEO of Redefine, stated that the decrease in political risk, along with a stable electricity supply, has boosted confidence. He noted, “Advancements in strategic reforms, such as Operation Vulindlela and the Government of National Unity’s emphasis on supporting local government as well as a commitment to achieving 3% economic growth, are all contributing to this increased confidence, which serves as a cost-effective form of economic stimulus. This, combined with falling interest rates, is helping to propel the property cycle upward.”

Redefine has focused on preparing for a potential recovery in the property cycle. The reported enhancements in operating metrics, though starting from a low baseline, are primarily the result of strategic initiatives. These include efforts to simplify the asset base, optimise capital by restructuring R27.7 billion in local debt, develop talent, and expand sustainability initiatives like the implementation of solar PV systems to meet energy needs.

Redefine’s COO, Leon Kok, noted that during the reporting period, most of the company’s South African operating metrics have either stabilised or improved. “In particular, occupancy rates increased to 93.2%, up from 93.0% in FY23, with noticeable enhancements across all sectors. Tenant retention, which has become more difficult due to heightened competition from excess supply, is nearing 90%. This is a strong result that reflects the quality of Redefine’s portfolio and the strength of our relationships with tenants, who are eager to renew long-term leases with us.”

He stated that Redefine’s retail portfolio continues to perform well, with occupancy rates for FY24 rising to 95.0% (FY23: 93.6%). “We anticipate further improvements in occupancy rates for FY25 due to positive sentiment and decreasing interest rates, which are expected to enhance consumer spending power.”

Redefine reported an overall improvement in renewal reversions, now at -5.9%, up from -6.7% in FY23, primarily driven by the retail and industrial sectors. While the office portfolio saw negative reversions of -13.9%, Kok explained that this was due to market rentals not keeping pace with underlying rental escalations. He anticipates stabilisation as market conditions improve.

However, occupancy in the office portfolio continues to benefit from Redefine’s exposure to P- and A-grade assets. The limited demand in the office market is increasingly focused on higher-quality properties, where Redefine holds a more competitive advantage.

Redefine’s industrial portfolio remains resilient, benefiting from long leases and quality tenants, with renewal reversions increasing by 5.5% during the period. Kok noted that this result reflects both the portfolio’s quality and the underlying activity supporting market rental growth. “Our strategy in this sector is bullish regarding capital allocation, as we have access to developable land in prime locations near key transport hubs, which should create a strong pipeline of leasing opportunities.”

Kok highlighted the increase in solar PV capacity as another positive result from FY24. During the year, Redefine added a further 8MW of solar capacity, with an additional 18MW currently underway. Once completed, this will bring the total installed capacity to over 60MW.

Solar PV accounts for 18% of the energy requirements for the South African retail portfolio, while Polish retail, logistics, and office sectors utilise 25%, 86%, and 100% green energy, respectively.

In Poland, EPP’s core portfolio has achieved an occupancy rate of 99.1% (FY23: 98.4%), with renewal reversions turning positive at 0.2% (FY23: -7.2%), which signals a return to market rental growth.

“The Polish economy is stabilising, and we are beginning to observe a rebound in retail spending growth due to moderating inflation and electricity costs returning to pre-energy crisis levels,” König explained. “Likewise, the logistics sector is performing well, supported by a market that favours infrastructure expansion, particularly in Western Europe and Germany.”

ELI, Redefine’s Polish logistics platform, has an occupancy rate of 93.4%, and the 62,601 sqm of developments completed during the period are fully occupied.

Redefine’s self-storage operations in that market are also growing, following the acquisition of TopBox. Along with seven new developments being considered, this could potentially increase the net lettable area by an additional 33 277 sqm.

Redefine CFO Ntobeko Nyawo said that from a financial standpoint, Redefine’s balance sheet remains strong. “We achieved distributable income per share of 50.02 cents, in line with our market guidance. Net operating income in our South African portfolio grew by 5.2% to R4.967 billion, demonstrating our ability to maintain profitability amidst challenging conditions.”

The EPP core portfolio delivered net property income of R1.3 billion, which is an improvement on last year’s R1.2 billion, and was largely driven by rental indexation and increased occupancy levels. The cash distributions from the joint ventures also increased to R612.4 million compared with R334.3 million in FY23.

“We have acknowledged concerns regarding the complexity and high leverage of our joint ventures. To address these issues, we have developed a comprehensive plan and programme that will be implemented over time. Although this is not an immediate process, we have a medium-term strategy designed to tackle the challenges associated with these joint ventures, including necessary corporate actions. We are also pleased to report that institutional investment is returning to the Polish market, which supports the launch of our action plan.”

Nyawo said that the solid operational results were offset by the net finance charges increasing by 15.1% to R2.1 billion. “However, if we look at the quality of our earnings, it is pleasing that 95.8% of FY24 distributable income is recurring in nature; demonstrating the business’ ability to generate sustainable earnings in a tough operating environment.”

Nyawo stated that a major priority this year has been developing an efficient funding model to support the growth ambitions of the property platform. During the period, Redefine achieved a significant milestone with its innovative R27.7 billion common debt-security structure, which is anticipated to enhance competition among funders.

“The substantial refinancing completed in FY24 has resulted in a very low-risk debt maturity profile for us. In FY25 and FY26, no more than 10% of our group debt will be maturing, and with access to liquidity of R4.8 billion, our business is able to absorb headwinds and cease opportunities as they arise.”

He noted that the SA REIT’s loan-to-value ratio for FY24 stood at 42.3%, slightly exceeding the target range of 38% to 41%. The acquisition of the Mall of the South contributed 1.1% to this figure, which Redefine had previously communicated to the market. There are plans in place to reduce this ratio within the target range over the medium term.

“Finally, we are pleased to report that our distribution results include a payout of 22.2 cents for the second half, bringing our FY24 payout ratio to 85%. This is within our established dividend payout range of between 80-90%.”

Looking ahead, König said that Redefine is optimistic about FY25, with expectations for distributable income per share to range between 50-53 cents. “We are aware of the geopolitical risks that could disrupt inflation trends and monetary easing. Therefore, we are committed to improving our business performance by enhancing operational efficiency, restructuring our debt, and further simplifying our asset base. This approach will enable us to achieve risk-adjusted returns throughout market cycles. We are transitioning from merely identifying opportunities to actively capitalising on them, building on the progress we’ve made over the past year and focusing on the opportunities we identified in FY24.”

He added that much of the recent improvement in Redefine’s share price can be attributed to macroeconomic factors, such as increased confidence and the downward shift in interest rates. “Moving forward, we need to reinforce this improvement with operational results that support our share price. Our strategy emphasises organic growth, and as our share price approaches a level where the forward yield aligns with our debt pricing, we can reassess the overall debt-equity balance. Additionally, we will offer a dividend reinvestment plan, which seeks to conserve cash for the company and give investors the opportunity to cost effectively reinvest in Redefine’s compelling investment proposition.”

 

Redefine restructuring of R27.7 billion secured evergreen funding

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Redefine Properties launches an industry leading structure with R27.7 billion evergreen secured funding arrangement

 

Johannesburg, 15 October 2024 – Redefine Properties has achieved a major milestone with the successful restructuring of a R27.7 billion secured funding arrangement. This transaction, the largest of its kind in the South African listed property sector, marks a significant shift in how Redefine manages its funding. The innovative structure, designed as an evergreen arrangement, has streamlined business processes and set a new benchmark within the sector.

Redefine previously entered into bilateral loan agreements with funders, who were each given a segregated pool of security with a portfolio of assets. These facilities have now been restructured to allow for all funders to participate in a common shared security pool, which is governed by a common terms agreement upon which all funders can base their terms.

The portfolio of assets that will be used as the common security pool, comprises of 127 properties valued at R46.3 billion, is which represents 72% of Redefine’s direct South African property portfolio.

“By taking the assets that we believe are the core cash generation backbone of our business for the foreseeable future and putting that on equal footing to all of our funders, we are leveraging the strength of our well-diversified investment portfolio, giving us flexibility to price our debt sustainably throughout market cycles,” said Ntobeko Nyawo, CFO of Redefine.

Underlying flexibility agreements for the common security pool will give us the ability to maintain market relevant commercial agreements. Unlike other security structures of a similar nature, Redefine has chosen not to have a single clearing pricing point, giving the company the flexibility to manage concentration risk over time and throughout market cycles when refinancing maturities.

There are 11 funders including the big four SA banks and the typically large institutional investors in the secured lending space. However, the beauty of the structure is its evergreen nature without any lifetime limitations and will thus allow lenders to come and go over time seamlessly.

The new structure will govern Redefine’s lending going into the future with the terms agreed to applying to Redefine’s secured lending going forward. “Essentially, the common security pool structure will be the single market access point for any lender to offer secured debt to Redefine, giving it the flexibility to supply debt on an end-to-end basis,” Nyawo explained.

A simplified, efficient channel for raising debt

The benefit for Redefine is to ease the operational administration of its funding arrangements as the new structure materially simplifies the ways in which the business brings in funders of secured debt due to referencing a single security pool while enabling a channel to secure that debt in an efficient manner.

“One of the key benefits of bringing funders into a singular, common collateral pool is that it will enhance Redefine’s secured debt market appetite,” Nyawo said. “By ringfencing the funding to a single lender, the bilateral funding left little room for competition”.

As a consequence of the lending structure referencing a far more diversified security pool, funders gain cross-sector exposure that enhances their diversification, reducing concentration risk for lenders and thereby improving the credit profile.

It also makes it possible for Redefine to more effectively add potential differentiated funders like a Development Finance Institution (DFI) to the mix of secured funders, whereas in the past Redefine was unable add a DFI to another lender’s portfolio.

Importantly, the structure is underpinned by a mechanism, which has been clearly defined and agreed to by the common terms arrangement, that allows for the release of assets from this pool to support Redefine’s active asset management strategy.

“Through this restructure, Redefine has created a sustainable, diversified funding model that reduces market shadowing of debt and enables the execution of strategic priorities including the efficient sourcing of capital and diversify our funding base,” Nyawo said.

Sourcing capital efficiently throughout market cycles

“Creating a sustainable funding vehicle is central to our business model,” he added. “Since our company primarily depends on gearing, it is essential that we source capital efficiently through market cycles, which we have accomplished with this transaction. When funding pools were dispersed in the past, Redefine was beholden to the incumbent lender’s risk and pricing considerations as opposed to market clearing gearing and pricing. In contrast, a common security pool should support our earnings over time much more when market cycles are turning in our favour. Equally so, when the cycles turn against us, we will be much more adept at managing the challenges brought on by the rising cost of debt.”

Nyawo said that the extensive collaboration with the 11 key funders was instrumental to concluding this transaction, which is the largest common security structure the market has ever seen. “This extremely complex transaction was completed in less than six months, which is a testament to the tremendous work and commitment of the team leads of our partner lenders and advisors.

RMB was the mandated lead arranged for Redefine and Webber Wentzel acted as lenders counsel.

He added that the restructuring coincided with a time when fundamentals required for listed property re-rating, such as economic growth, which the new government of national unity is targeting at 3.3%, are encouraging and resulting in increased confidence in the sector. This, combined with the ability to raise capital efficiently, means Redefine is better positioned to fund both organic and inorganic growth opportunities, he said.

“The common funding pool’s evergreen structure we believe is fundamental to our long-term balance sheet management and truly supports our strategic ambitions of building a simplified, diversified cash accretive listed property investment portfolio,” Nyawo concludes.

ENDS

 

 

Redefine comments on transformative potential of CID’s

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In Johannesburg, City Improvement Districts (CIDs) are playing a crucial role in urban development and management. These districts, driven by collaboration between property owners and tenants, are addressing critical urban challenges and enhancing the quality of our business environments.

As a stakeholder in South Africa’s property sector and a key player in several CIDs, I’ve observed first-hand the significant impact of these initiatives on our urban landscape.

Understanding CIDs

A CID is a defined area where property owners collaborate to provide supplementary services beyond those offered by local municipalities. In areas where municipal services struggle to meet the growing demands of our dynamic cities, CIDs step in to elevate the urban experience. CIDs provide a range of crucial additional services, including enhanced security measures, cleaning operations, and various urban management initiatives such as traffic management, landscaping, pothole and traffic light repairs that improve the overall business environment.

The funding model for CIDs involves property owners paying levies to support additional services. At Redefine Properties, we’ve been at the forefront of this urban evolution, taking an active role in shaping the governance and strategic direction of CIDs where our properties are located. In most instances where Redefine participates in CIDs, a member of our team is assigned as an active director on the CIDs’ board to ensure that the funds collected are well spent and that the necessary governance checks and balances are in place. Redefine ensures that we have clean audits on all CIDs that we participate in each year.

This collaborative approach between property owners allows CIDs to become powerful tools for this level of revitalisation. They not only maintain but actively improve the quality of our shared urban spaces, contributing significantly to the attractiveness and competitiveness of key business areas in Johannesburg.

The economic impact of CIDs

But why should this matter to you, whether you’re a Redefine tenant, business owner, property investor, or simply someone who cares about the future of our cities? The answer lies in the ripple effect of urban redevelopment. A well-managed CID doesn’t just improve the aesthetic appeal of an area; it becomes a catalyst for economic growth within and around the demarcated CID area.

Businesses thrive in environments where customers feel safe and comfortable. Property values stabilise and increase where there are successful CIDs in place. Employment opportunities multiply as the area attracts new investments. In essence, CIDs are not just about maintaining streets; they’re about nurturing the very ecosystem that allows our urban economies to grow.

Sandton Central: A success story

Take, for instance, Sandton Central, Johannesburg’s financial capital, which has maintained its status as a world-class urban centre thanks in large part to the tireless efforts of its CIDs which have been in place since 2003.

Driven by the commercial property owners, including Redefine, the Sandton Central Management District was founded to ensure the creation of an exceptional experience in this key node of Johannesburg. It was established for the employee, visitor, tourist, shopper, property owner and resident of Sandton Central and thus focuses on how this area can better serve these stakeholders. Their team of public safety ambassadors, dedicated JPMD cars with paramedic staff, and on the ground cleaning staff work around the clock, ensuring that Sandton remains a beacon of urban excellence.

As a significant property owner in Sandton, Redefine has played a key role in this CIDs preservation and further transformation. Recently, Redefine as well as other property owners and tenants within the precinct partnered with the City of Johannesburg’s road agency, Eskom and the Sandton Central Management District to power traffic lights at major intersections using generators from its buildings during loadshedding. This initiative has led to all but four intersections being powered by private owners in the event of load shedding or an electrical fault. This hands-on approach has allowed us to pioneer innovative solutions to urban challenges, contributing to Sandton’s success story.

Legal challenges and the need for reform

However, the road to urban revitalisation is not without its obstacles. In 2015, a Supreme Court of Appeal judgement in the Randburg Management District case sent shockwaves through the CID community. By questioning the legality of CID levies under the Gauteng City Improvement Districts Act, this ruling effectively rendered CID funding voluntary. This decision has significant practical implications: without a secure legal basis, CIDs face uncertainty in their operations and long-term planning, potentially undermining their ability to provide consistent, high-quality services.

This legal uncertainty has increased the difficulty of starting new CIDs and the ongoing sustainability of existing CIDs, but I believe it also presents an opportunity for meaningful reform. As industry leaders, we have a responsibility to advocate for a robust provincial and/or municipality legal framework that will secure the long-term sustainability of CIDs. Why? Because this isn’t just about protecting our investments; it’s about safeguarding the future of our cities.

The CID imperative

 CIDs have proven their worth in transforming urban spaces and driving economic growth, as evidenced by success stories like Sandton Central. However, their future hinges on establishing a recognised legal framework at the municipal level in Gauteng and potentially nationwide.

At Redefine, we’re actively working to strengthen and expand the CID model. We’re advocating for clear legislation, engaging with stakeholders, and investing in innovative urban management solutions. Our commitment stems from our belief in CIDs’ potential to drive urban revitalisation.

We invite all stakeholders – other property owners, our tenants, and city officials – to join us in recognising the value of well-managed CIDs and strengthening this crucial tool for urban development. Your active participation, from governance to advocacy, is essential.

Written by Scott Thorburn, National asset manager – Office at Redefine Properties

 

Redefine second place at EY 2024 Integrated Reporting Awards

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Redefine Properties celebrates second place in Integrated Reporting at the 2024 EY Awards

Johannesburg, 06 September 2024 – Redefine Properties is proud to announce its recognition in the prestigious EY Excellence in Integrated Reporting Awards, securing second place for 2024. This accolade marks the eleventh consecutive year that Redefine has ranked among the top 10, underscoring the company’s consistent leadership in transparent and impactful reporting.

Redefine’s integrated report serves as a vital platform to share the company’s strategic advancements and future priorities as it continues its transformation journey. An integrated approach to strategic decision-making remains the bedrock of sustainable value creation for all stakeholders over the short, medium, and long term. This year’s report goes beyond financials, offering a comprehensive view of Redefine’s environmental, social, and governance (ESG) strategies, their real-world impact, and the company’s future objectives.

The EY Excellence in Integrated Reporting Awards evaluate the integrated reports of the top 100 JSE-listed companies, based on market capitalisation as of 31 December 2023. These awards aim to set a benchmark for excellence in integrated reporting within South Africa’s listed sector. They recognise companies that effectively communicate their value creation processes to investors and stakeholders, highlighting the board’s careful consideration of material issues in achieving strategic goals.

This ongoing recognition within the industry highlights Redefine’s commitment to maintaining the highest standards in integrated reporting and transparent disclosure across critical areas such as corporate governance, environmental conservation, and community engagement.

Commenting on this achievement, Redefine CEO Andrew König said, “Securing a top position in these awards year after year strengthens our resolve to further embed sustainability principles into our strategy. It also reinforces our commitment to presenting information that enables stakeholders to assess our ability to create and sustain value over the medium to long term.”

Redefine positioned for growth as sector confidence improves

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Redefine positioned for growth as operational performance, sector confidence improves

Johannesburg, 27 August 2024 – Redefine Properties CEO Andrew König emphasised the company’s focus on mindful optimism during its Capital Markets Day 2024 in Sandton, Johannesburg, on Tuesday. He described how the business is positioned for growth as shifts in the operating environment, despite the persistence of economic and socio-political stresses, contribute to improved levels of confidence in the property sector, citing anecdotal evidence to support the company’s posturing.

Redefine’s property asset platform, currently valued at R100.4 billion, comprises key real estate assets in the retail, commercial, logistics, and industrial sectors in South Africa and Poland. Over the last five years, Redefine has transformed its property asset platform by reducing exposure to multiple risk universes through non-core asset disposals and reallocating capital to growth sectors and geographies like Central and Eastern Europe, where there is the prospect of emerging market growth at a lower risk premium.

König clarified on Tuesday that Redefine’s strategy of sectoral and geographic diversification is aimed at delivering stable returns by mitigating the cyclicality of sectors and reducing economic risks and vulnerabilities in the domestic environment, such as resource and infrastructure crises that impede growth in South Africa.

“Even though the SA environment remains challenging, we are committed to the continent’s most diversified economy, which continues to demonstrate resilience in the face of adversity. How we adapt to overcome obstacles and seize opportunities will ultimately distinguish us as the country’s best Real Estate Investment Trust.”

König said Redefine had adopted an ‘opt-for-the-upside’ approach, meaning that the company embraces opportunities within the real estate sectors it operates in, even when faced with obstacles, rather than choosing to divest. Now, Redefine is expanding its approach to all its stakeholders by inviting them to “join the upside” as the tide turns in its favour.

Encouraging improvements in operational performance

Redefine’s South African portfolio has benefited from an active asset management strategy to transform it to a defensive portfolio of high-quality assets that is well diversified, according to COO Leon Kok. He also stated that most of its operating metrics have stabilized and is well positioned to deliver organic growth.

“Take, for instance, the Western Cape’s office sector, which was engulfed in a perfect storm of oversupply, tepid economic growth, and the rise of remote work. Today, office space is in high demand and facing a stock shortage, with the city recording a 20% increase in market rentals over the past few months. This shift is driven by the growing popularity of business process outsourcing, the semigration trend, and the return of businesses to physical office settings,” Kok said.

Nationally, the number of vacancies in the office sector has decreased for eight quarters running. The most recent data from the SA Property Owners Association for the second quarter of 2024 showed a decrease to 14.2%, which is 2.5% below the high point for office vacancies and falls in line with Redefine’s vacancy rate for FY24.

National asset manager for office, Scott Thorburn, stated that the demand for quality A- and P-grade assets, which comprise the majority of Redefine’s office portfolio, has bolstered the occupancy rate to 87.8% for FY24. According to Thorburn, the rise in market rentals observed in stronger nodes in Johannesburg and Cape Town will help ensure sustainable and robust returns as the office sector recovers.

Redefine is also witnessing positive rental reversions in the retail space, indicating that the industry has turned the corner and is about to enter a growth phase. According to Redefine’s National asset manager for retail, Nashil Chotoki, the retail portfolio’s sales and overall turnover have already surpassed pre-pandemic levels. The company expects this growth to continue, driven by its expanding exposure to clothing and necessities, as well as by a potential drop in national interest rates, which would increase consumers’ disposable income.

Positive post-election developments helps business confidence

Along with the sector’s encouraging operational performance, König said that reduced political uncertainty following the formation of the Government of National Unity, a strengthening currency, and advancements made since the launch of Operation Vulindlela in 2020 to address long-standing constraints related to electricity supply and the availability of digital spectrum have all contributed to improved confidence levels in the real estate market.

“The emphasis now needs to shift to addressing the country’s inefficient freight logistics system, the deteriorating performance of local government, and ageing water infrastructure that is impacting supply networks. The new resource challenge is limited water supply, and this is a difficult matter to manage.”

With further major water outages expected due to scheduled maintenance and ongoing infrastructure issues, Redefine is planning to get ahead by executing a water resilience strategy focused not only on reducing water consumption but also on developing additional storage capacity. This strategy aims to provide up to a five-day buffer in certain buildings, increasing their water security in case of a major outage.

Electricity supply, on the other hand, has improved significantly, which König said is itself confidence-boosting and translates into significant savings for a business like Redefine, which was previously burning through hundreds of thousands of litres of diesel to supplement energy supply, with those costs having to be shared with tenants.

Strong focus on efficiency, cost reduction supports organic growth

Despite domestic headwinds and administered costs growing faster than rental income, CFO Ntobeko Nyawo said Redefine maintained positive operating leverage across key segments. Nyawo described the Group’s 75.3% net operating profit margin as a remarkable achievement given the circumstances and an excellent demonstration of the emphasis on cost containment and efficiency.

“Energy costs continue to drive up operating expenses, but the deployment of solar PV as part of our priority to maximise efficient natural resource consumption is generating cost savings. This, along with other cost-saving initiatives, such as disciplined cost containment while growing revenue, is yielding stable operating leverage,” he explained.

Redefine has made significant strides in sourcing efficient capital, as evidenced by the R15.6 billion in green funding it has raised since 2022. This has transformed the Group’s funding profile, with 35.3% of Group debt now linked to green finance. This promotes the long-term decarbonisation of buildings, which Nyawo said have become more desirable and drive higher value due to reduced operating costs and the systemic risk linked to climate change.

“The business has remained cash-generative, with collections across the Group remaining healthy in both the South African and Polish portfolios due to this efficiency drive and focus.”

Nyawo said Redefine’s balance sheet is stable and will continue to be managed conservatively to sustain growth as market dynamics evolve. The expectation that interest rates are shifting to a cutting cycle is significant, and a 25 to 50 basis point cut will lower finance costs and support share price growth, enabling the company to consider capital retention opportunities through the dividend reinvestment programme.

The Group is pleased to announce that it has maintained its earnings guidance of Distributable Income Per Share at 48 cents to 52 cents for FY24.

Looking ahead, Redefine is engaging with tenant stakeholders to broaden and expand the scope of sustainability initiatives, aiming to reduce scope 3 emissions and deepen its ESG impact. Additionally, technology capabilities are being strengthened to improve the tenant experience.

 

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