Redefine is a South African-based Real Estate Investment Trust (REIT), with a sectoral and geographically diversified property asset platform valued at R75.3 billion (FY20: R81.0 billion). Redefine’s portfolio is predominately anchored in local directly held retail, office and industrial properties, which is complemented by retail and logistics property assets in Poland.
Redefine’s purpose is to create and manage spaces in a way that changes lives, which requires more than a business as usual approach: it requires an integrated approach to making strategic choices that will sustain value creation for all stakeholders by focusing on what matters most. Redefine is listed on the Johannesburg Stock Exchange (JSE) with a market capitalisation of R25.0 billion (FY20: R14.9 billion). By volume, Redefine’s shares are among the most actively traded in the SA REIT sector, making it a highly liquid, single-entry point for investors to gain exposure to the domestic and
Polish real estate markets.
Redefine’s local property assets are valued at R63.0 billion (FY20: R65.4 billion). The international real estate investments are valued at R12.3 billion (FY20: R15.6 billion) representing 16.3% (FY20: 19.3%) of the Group’s total property assets, providing geographic diversification to Poland. The decrease in the property assets in the current period is due to disposal activity, Rand appreciation and negative fair value adjustments.
Distributable income per share for the six months ended 28 February 2021 amounted to 26.18 (HY20: 33.46) cents, a decrease of 21.8% on the previous pre-COVID-19 pandemic comparable period. Total revenue (excluding straight-line rental income) decreased by 13.8% (HY20: growth of 8.5%). The decrease in revenue for the period is largely attributable to the deconsolidation of European Logistics Investment B.V. (ELI) (which is now equity-accounted) during the second half of 2020, the sale of Leicester Street and non-core local properties during the period. In addition, Redefine’s local property portfolio performance was impacted by the various lockdown levels and restrictions imposed by the government to curb the spread of the virus. This necessitated negative rental reversions and the granting of further rental relief albeit at a lower level compared to the prior year to support the sustainability of our tenants. During the period, total relief granted to our tenants amounted to R107.3 million (FY20: R318.5 million), made up of rental discounts of R81.5 million and deferred rental payments of R25.8 million. Retail tenants – in particular travel agents and cinemas were the most impacted, with hairdressers and beauty salons still battling to recover. The decrease in revenue accounts for the bulk of the decrease in distributable income.
Due to continued hard lockdown measures adopted by the Polish government to curb the rise in COVID-19 pandemic related hospitalisation, EPP N.V. (EPP) have once again withheld dividends during the period to preserve financial flexibility and bolster their own liquidity. Given the encouraging progress of the Polish vaccination programme, we expect a strong rebound in the Polish economy which will be supportive of a buoyant retail environment in 2022. The Polish logistics assets have proved to be resilient during the period, maintaining their dividend fl ow with very limited impact to their operations.
The operating cost (including expected credit losses-trade receivables) margin increased to 38.1% (HY20: 36.0%) of contractual rental income (excluding straight-line rental income accrual) due to negative revenue growth. Net of electricity cost and utility recoveries, operating costs were 18.2% (HY20:17.4%) of contractual rental income (excluding straight-line rental income accrual).
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