The knock-on effect of the series of lockdowns was most severely felt by the retail sector especially as traffic drivers like restaurants, beauty, cinema and other leisure venues remained closed for the longest time. A better-than-expected recovery and steady vaccination numbers has given the government more options to reopen the economy with confidence. This is reflected in the new data and shows spending at physical stores has reached pre-Covid levels in spite of the growth in online retail.The national card purchase trend volumes analysed by Nedbank point to an average 4% growth in number of online transactions in 2021 compared to 2019. During the same period online sales grew by 1% to 1.5% indicating smaller basket sizes for online sales.A new study by MSCI shows that some areas of retail like convenience centres are seeing a rise in sales and visitors with trading densities exceeding pre-Covid levels. Others like super regional centres have not recovered to pre-Covid levels however small green shoots of recovery are beginning to emerge.“The growth of convenience centres is hardly a new trend. First witnessed during 2016, the work from home tailwinds really helped convenience centres to quickly grow from bread and milk stops to shopping destinations. This impressive growth has even caught the eyes of major fashion retailers and brands who are now actively seeking space in the once humble centres,” says Nashil Chotoki, National Retail Asset Manager, Redefine Properties.“We are confident that as we inch closer to vaccination numbers required for herd immunity and hybrid working conditions are in place, traffic will return to large format centres. We are already seeing a rebound in Q2 2021, as people have slowly started returning to them.”Redefine Properties which has some 70 retail properties, of which 48% are regional and super regional centres expects negative rental reversion to ease as other retail outside of essential services recover and the diversified nature of the retail portfolio has proven to be defensive despite volatility. Redefine’s retail portfolio generates on average R173.7 per m2 and are 94.5% occupied.According to Leon Kok, COO, Redefine Properties, physical shopping centres will continue to be the mainstay of shopping activity, but online must be part of the offering to consumers.“After more than 18 months of limited shopping, social distancing and working from home, we expect people to return with more confidence as we emerge from the pandemic. Last year we learned the convenience of online shopping, and now it is likely that there will be more premium placed on shopping experiences.”“We are partnering with Quench to launch a pilot at the Kyalami Centre during December which will allow shoppers the ability to buy from multiple stores in a mall on a single platform, pay for all the purchases in a single transaction and have it delivered to your home.”The partnership will give independent retailers an immediate online presence and shopping centre owners will be able to track sales and turnover performance. If the pilot is successful, Redefine plans to roll-out to other centres in its portfolio.“As channels, both the store and online are complementary. And numbers make it evidently clear that e-commerce growth has not impeded opportunity for brick-and-mortar to grow. This omnichannel growth demonstrates the need to bridge the physical and digital divide in the new normal. Shoppers want a multi-dimensional retail option, and retailers and landlords need to speak to needs in both environments.”Within its portfolio Redefine is finding that its turnover recovery continues to be driven by essential services, home improvement, apparel and take-outs.“In and through the pandemic, we have retained our focus on de-risking our balance sheet, lowering our LTV ratio and trimming our local and offshore property platforms. This has not only provided us with sufficient liquidity to position the company for exciting opportunities but also focus on the key issue of sustainability,” adds Kok.Active asset management will see Redefine reduce water consumption by over 42 megalitres in its retail portfolio alone. Furthermore, the successful sustainability linked bond raise of R1 billion will also see Redefine investing in expanding solar capacity by a further 13.4 MWP achieving annual electricity cost savings of R36.5 million. Already underway are energy efficiency projects to reduce consumption by 1.2 MWh."The economy and consumer spending have proven to be more resilient than initially forecasted. While there are downside risks related to unemployment and economic policy reform overall households are healthier, and consumers are demonstrating their ability and willingness to spend despite fewer visits to the mall, concludes Kok.
JSE-listed diversified real estate investment trust (REIT) Redefine Properties returned to the podium, winning top honours in the latest EY Excellence in Integrated Reporting Awards. Adjudged the overall winner for 2021, Redefine’s Integrated Report has consistently featured in the top three for the past five years. A top 10 honouree since 2015, the first place in this year’s ranking is a strong endorsement of the company’s application of integrated thinking on a wide range of issues such as corporate governance, initiatives to protect the environment, and the way it serves its communities. The purpose of the awards is to encourage and benchmark standards of excellence in the quality of integrated reporting to investors and stakeholders in SA’s listed sector. The awards are based on how well companies explain to stakeholders how they create value over time and how the board considered material matters to ensure the strategic objectives are met. Our integrated report communicates our efforts to improve the built environment for people and communities by creating, managing, and investing in spaces in a manner that changes lives. The report is a vital communication tool conveying to our stakeholders our financial aspects as well as environmental, social and governance strategy, impact and goals. That our report with its transparent and simple content was found to be the best, serves as a benchmark and makes us extremely proud. We believe the property sector with who all South Africans interact and engage with daily when they go to work, shop and even play should be a visible contributor to practices that preserve the environment and promote social cohesion. Recently Redefine raised R1 billion on the JSE through the issuance of its first sustainability-linked bond. This is the largest amount raised by a local REIT in the growing sustainability-linked bond space. The COVID-19 crisis has also been a “sustainability” crisis and one that has challenged us to renew our focus on the environment and society, as well as catalyse new approaches to inclusivity and mainstreaming governance. For us, financial results are not the only measure of success, hence our integrated report encompasses our strategy and performance in the area of ESG as well as future expectations, commitments and goals. Our consistent recognition is a testament to our commitment to the highest standards of corporate reporting and transparent approaches in our disclosures. It also underscores our approach to integrated thinking and the partnerships we share with our stakeholders by presenting information in an engaging and transparent manner. The recognition strengthens our resolve to further embed key sustainability issues in our strategy and present information in a manner that enables stakeholders to analyse and assess our ability to create and sustain value in the medium to long-term horizon. The recognition once again demonstrates our leadership in reporting of our sustainability performance and reflects our readiness to build a resilient future. We are deeply encouraged and will continue to integrate sustainability considerations into everything we do.
While the COVID-19 third wave and severe social unrest have hampered sentiment, Redefine Properties says it has trimmed down and simplified it’s local and offshore property platforms, resulting in the de-risking of its balance sheet and providing it with sufficient liquidity to position the company for exciting new opportunities and a potential resumption of paying dividends.“Our focus has been on implementing our strategy and looking through the cycle, which positions us well for the eventual turnaround,” says Redefine CEO Andrew König.Redefine had resolved not to pay a dividend in respect of the 2020 financial year in the face of ongoing COVID-19 uncertainty, but König says the strong progress on preserving liquidity and managing risks means the company, subject to the requisite solvency and liquidity test, expects that a dividend can be paid once again for the financial year.“Although confidence overall has taken a knock, it has not taken the wind out of the sails of the economy and the momentum from the first half of the year has not been lost. The unrest was severe and very regrettable, however it did highlight the urgent need for socio-economic transformation – an absolute necessity already amplified by COVID-19,” says König.As per the pre-close presentation for the year ending 31 August 2021, Redefine CFO, Ntobeko Nyawo, says substantial progress has been made in de-risking the balance sheet and bolstering liquidity.“We would like to be at sub-40% on our loan to value ratio and we are making significant progress to achieving this in line with a well-crafted and deliberate plan to right-size our asset platform.”Nyawo says that despite the tough operating environment, Redefine remained highly cash generative and improved its liquidity with R5.6bn in cash and committed access facilities on hand compared to R2.8bn in the last reporting period.“This speaks to the quality of Redefine’s portfolio and diversification, as it navigates a tough operating environment.”König says one of the keys to the turnaround will be a pick-up in the vaccination rate. He also believes one of the keys to Redefine’s future success will be ensuring the company adapts and innovates in an inclusive way to meet new, evolving demands.“The pandemic and social unrest highlighted the need for inclusivity and so our ‘moonshot’ strategy is to focus on this theme. It entails ensuring collaboration with communities and all stakeholders, especially tenants in the office space. We need to ensure we are relevant to our user’s needs all the time. We are also harnessing technology to leverage off data more smartly and to create efficiencies. Our strategy includes driving diversity of thought to stimulate diversification and to reshape funding sources,” says König.He points to the success of the R1 billion sustainability bond – Africa’s largest by a REIT – as an example of this new approach in action to support and grow Redefine’s future business and strategic intent. “It gives us a platform to launch further bonds of this nature, but which are longer dated,” he adds.Meanwhile, the quantum of the damage caused by the recent looting and unrest “is fortunately less severe than we initially thought, with the rebuilding and reinstatement of properties set to happen faster than anticipated”. Redefine has adequate Sasria insurance cover in place to cover the reinstatement cost as well any losses of income during the rebuilding.Chief operating officer, Leon Kok, says while the various levels of lockdown and unrest had impacted the retail portfolio, “the recovery trend has been steady and quite positive.”“The footfall and tenant in-store activity also suggests the very pessimistic outlook at the height of COVID-19 and lockdown was unwarranted. Online retail continues to evolve, but most are embracing a dual strategy and we are looking at how we can enable that as it is clear it is important that in-store experiences are maintained,” says Kok.He says while economic fundamentals “have not been kind” to the office market, with severe lockdowns impacting livelihoods – there are signs of confidence returning in tandem with the vaccination drive. “A heightened vaccination rollout will support confidence, and we are also seeing more people returning to physical workspaces. We need to ensure we support corporates as they adapt to the new normal, including how they look to use their space,” he says.Kok says the industrial portfolio remains very resilient, notably thanks to increased warehousing and distribution activity. “I am not suggesting we have troughed, but there is still a fair element of deal activity, and I am very confident about prospects.”Kok sees exciting potential thanks to government lifting the threshold for private energy production without a licence from 1MW to 100MW. “So we can expand existing solar PV installations which were previously subject to the 1MW cap. This is a fantastic opportunity as we expect to expand by just over 12MW across our portfolio, further entrenching our broader ESG ambitions, while we will also achieve greater security over electricity supply.”König says positive news is that Redefine has achieved settlement certainty on the sale of the remaining student accommodation facility in Australia – due on 15 February next year. The sale of the local student accommodation portfolio has also been concluded.Offshore, the logistics platform continues to expand by way of development activity and valuations are benefitting from strong investor demand.“We are seeing fantastic opportunities to take advantage of investor demand. For example, we are recycling some of the more mature assets initially acquired at very compelling yields, which will be invested into new developments,” says König.The logistics outlook in Poland remains particularly promising as e-commerce and logistics chains continue to grow in the post-pandemic environment.“Poland’s economy is bouncing back very quickly and could be at pre-pandemic levels within a year, which bodes well for the retail and logistics in that region,” concludes König.
Johannesburg, 26 July 2021 – Redefine Properties is leading the charge towards a sustainable future in the property sector with a R1 billion issuance on the JSE for its first sustainability-linked bond. This is the largest amount raised so far by a South African Real Estate Investment Trust (REIT) in the growing sustainability-linked bond space in South Africa.The funds will be used to refinance upcoming bond maturities which will allow Redefine to measurably increase the use of solar energy in the South African portion of its portfolio, facilitating a reduction in greenhouse gas emissions and significantly enhancing water efficiency solutions.The issuance was launched through Redefine’s JSE-approved R30 billion domestic medium-term note programme, raising a nominal R1 billion 3-year unsecured floating rate note that will mature on 26 July 2024.The outcome exceeded expectations and recognises Redefine’s improved balance sheet strength. It also bears testimony to the progress already made on the environment, sustainability, and governance (ESG) front.The need for sustainable energy and water solutions are vital to the future of the planet, with demand for green and sustainability bonds on the rise from investors. They are also key in efforts to raise funding for infrastructure development in emerging markets.“Redefine as a business is embracing ESG principles in all aspects of what we do, and our new sustainability-linked bond is one of the steps we are taking to integrate ESG into our funding plan. We are extremely pleased with the result of the issuance and look forward to doing more as part of our transitioning efforts, together with all our stakeholders,” says Redefine CEO, Andrew König.Redefine’s CFO, Ntobeko Nyawo says asset owners and key institutional investors have been advocating for a greater emphasis on sustainability – and Redefine has heard their call.“We are solidifying efforts to reduce our carbon footprint and help in the drive towards a more sustainable future. This also adds to the future resilience of our business,” says Nyawo.The key feature of this note is the linking of Redefine’s cost of funding to pre-agreed sustainability performance targets.“If we achieve all our sustainability performance targets, which will be independently verified, then there will be a benefit in the form of a reduction in interest rates. However, should we not achieve all our targets, we will continue to pay a higher interest rate. So, there is a material incentive to do what we set out to do, with a reward through reduction in interest rates which positively impacts overall cost of funding,” explains Nyawo. A reduced interest rate of 4 basis points is applied to the bond price at each of the target dates – meaning an 8-basis point benefit should all the targets be met.The target observation dates are 31 August 2022 and 31 August 2023. Redefine has committed to the renewable energy, greenhouse gas emission and water efficiency performance targets date. Renewable energy currently accounts for 5% of total energy consumption across Redefine’s South African portfolio.“The renewable energy target will be achieved through an increase in solar energy installed measured in Megawatt Peak (MWp) with respect to the South African portion of the property asset platform. The target is for a 3MWp increase at each of the target dates resulting in a cumulative 6MWp installation (25% increase on baseline),” says Redefine COO, Leon Kok.On greenhouse gas emissions the aim is to see a reduction in scope 1 and scope 2 emissions measured in tonnes carbon dioxide equivalent (tCO2e) with respect to the South African portion of the portfolio. By 31 August 2023, the intention is to see a cumulative reduction of 3,516 tCO2e (10% reduction on baseline), says Kok.Water efficiency means a reduction in the water withdrawn from municipal and borehole sources measured in Mega Litres (ML) – with the 2023 target being a 5.1% reduction from a baseline of 2,759ML (cumulatively 140ML).Nyawo says climate change has been identified by the World Economic Forum as one of the biggest risks for the global economy.“Through our programme, Redefine is effectively rewarded for setting the pace of the transition to ESG. It is also attractive to investors over the period and sets the business on the path to achieving sustainable returns, while doing its part in contributing to global climate goals,” concludes Nyawo.
Businesses across the spectrum have been targeted in Gauteng and KwaZulu Natal as violent civil unrest and disorder resulted in sporadic incidents of looting and damage to property this past week. Redefine can confirm that five of our properties in KwaZulu Natal, namely Ushekela Industrial Park, Cato Ridge Distribution Centre, the Scottsville Mall, Isipingo Junction and 320 West Street, and one property in Gauteng, namely our co-owned retail centre, Chris Hani Crossing in Vosloorus, were looted and damaged. Attempts to loot Maponya Mall and certain of our other malls in Gauteng were fortunately thwarted, but all building management remains on high alert.All our sites are being monitored and precautionary safety measures have been put in place to limit damage, as far as possible, to property and safeguard lives. In order to ensure the safety of our customers, tenants and employees we are monitoring the situation closely. Our unaffected shopping centres are operating as usual again but will be proactively locked down should the need prevail. Approximately 2% (by value) of Redefine’s property portfolio has been affected, although the quantum of the damage remains uncertain at this time. The affected properties are comprehensively insured and any loss of income is similarly covered by business interruption insurance cover.As a people centric organisation, Redefine shares the concerns of all South Africans about the unfolding events in our country and would like to thank its on-site staff, tenants, service providers, law enforcement agencies and the local communities who have all played an invaluable role in safeguarding Redefine’s properties during this difficult time.Stakeholders will be kept informed of any further developments.
Redefine advances strategy to reduce risk and improve quality across its property asset platformJohannesburg, 17 May 2021 – JSE-listed REIT, Redefine Properties, has reported a lower distributable income per share of 26.2c for the interim period to 28 February 2021, driven principally by the impact of Covid-19 on the property sector and broader economy. However, the company is in a strong position to benefit from an anticipated uptick in property fundamentals as conditions begin to improve in line with the expected vaccine rollout in the latter half of the year.The current reporting period covers six months during which the economy was battered by one of the world’s strictest lockdowns. Consequently, when compared with a pre-Covid prior reporting period, the distributable income is down 21.8%.CEO Andrew König says while the jury is out on the exact point at which the upward cycle will begin, an improvement back to pre-Covid levels should take place once vaccines are broadly rolled out.“We believe the bottom of the cycle has been reached. What we are expecting – and this is also what has happened in other countries who have made good strides on their vaccine programmes – is that the rollout of vaccines will lead to more mobility in the system. This means more people going out, to work, to shop and to play and that quickly translates into confidence, which is the cheapest form of economic stimulus,” he says.König says until an accelerated turnaround begins, however, weaker property fundamentals and low economic growth have to be factored in for 2021 and beyond.As a precautionary measure ahead of a still nascent vaccine rollout in SA, Redefine’s board has decided to take the prudent step to defer its dividend decision to year end.“We did not take this decision lightly at all and took all stakeholder interests into account. It is fundamental to our investment proposition to pay dividends, but unfortunately there is just too much uncertainty to factor in right now. We hope to have better news towards the end of the year, but as always we must act prudently,” he says.Ntobeko Nyawo, Redefine’s new CFO, says Redefine is in a strong position to benefit from future growth thanks to its focus on managing risk and optimising its balance sheet. At the previous year end, Redefine’s loan to value ratio (LTV – a key indicator of balance sheet risk) was at 47.5%, but by half year it was reduced to 44.3%.“We have continued to strengthen our balance sheet, through disposal of non-core assets. By doing the right things now we have access to ample liquidity (R4.8 billion) and achieved a pleasing 98% of gross billings in collections. Our net asset value per share also increased to 719.74 cents per share. This means our business has remained highly cash generative, despite the pandemic,” he says.Apart from the obvious Covid-19 impact, he says the decrease in revenue for the period was largely attributable to the deconsolidation of European Logistics Investment B.V. (ELI) during the second half of 2020, the sale of Leicester Street and the disposal of non?core local properties during the period. Dividends were also not forthcoming from Redefine’s 45.4% holding in EPP, who acted to preserve financial flexibility and bolster their own liquidity.Chief Operating Officer, Leon Kok, says Redefine managed to deliver positive outcomes during a difficult six months, thanks to its strategic intent of repositioning the asset platform to maintain relevance.“We focused on execution and this half is a clear demonstration of our strategy delivering the desired outcomes,” he says.Redefine’s total property assets under management are valued at R75.3 billion, with 84% invested in SA.Kok says concluded non-core property asset disposals realised R4.0 billion, with a further R2.7 billion currently at an advanced stage.“A further highlight was the completion of two new local logistics developments totalling R229.7 million, while the estimated cost of a new domestic retail and a logistics development in progress totals R293.2 million,” he says.König says the 16% of the portfolio now held offshore incorporates the recent sales of non-core assets like student accommodation in Australia, but he expects the offshore portfolio to grow through continued development expansion in the Polish logistics platform.“There will be an uptick – we just do not know how aggressive it will be. However, in Poland, the strong economic fundamentals mean they could bounce back to pre-Covid levels far quicker. In SA, it might take longer as the local economy was already fragile going into the Covid-19 crisis,” he says.Redefine is focusing on expanding into the logistics space through development locally and in Poland. It completed two local logistics projects and in Poland, where 67,343 square metres were completed at a cost Euro 40 million, with developments under construction of 173,240 squares, at a cost of Euro 120 million.Significant land holdings in strategic locations like Cape Town and Johannesburg will be harnessed for the local development. König says this growth will not be done speculatively, but rather through on-demand development for tenants.Redefine’s results paint the picture of a fairly stable retail and industrial space, but with offices struggling with weakened demand and oversupply of space.“What we have found is there is a flight to quality, with key locations and conditions proving more defensive and attractive,” says König.Redefine is positive that some normality will return to the office space despite talk of far less demand in a “new normal”.“Young people wanting to learn and be mentored are suffering the most. Corporate ethos and culture as-well-as collaboration also can’t be properly nurtured. Some service sectors like banking are also bemoaning the slip in turnaround times. I think this is why more people want to return to an office environment, and why a more hybrid model is likely. A 100% work-from-home simply does not suit a fully productive, engaged and connected workforce,” says König.“Our results reflect the important strides we are making in the creation of a more inclusive, sustainable and resilient operating context. Covid-19 has provided us with a unique opportunity to reset every aspect of what we do and the execution of our strategic priorities will position Redefine for the eventual upward cycle,” concludes König.
Rosebank, South Africa, 20 April 2021: Since the beginning of the pandemic, one of the biggest questions in real estate has been around office occupation as lockdown restrictions forced white collar workers to trade office desks for kitchen counters and coffee tables. Upended by Covid-19, the sector found itself in the worst stretch in decades with semi-permanent changes in the workplace now forcing a rethink of how space is used and leased.Before Covid-19, working from home (WFH) was an optional benefit, mostly a perk at the manager’s discretion. One of the key public health responses to the pandemic, the hard lockdown, made remote work available to everyone, doing what years of advocacy couldn’t do and only went to show that work could still be done if offices remained closed.While Covid-19 accelerated the WFH trend, it has also revealed its limitations. In today’s knowledge economy an organisation’s currency is inventiveness, culture, collaboration, skills transfer and camaraderie and a screen interface is no match or replacement for face-to-face interactions. “It is a forgone conclusion in the industry that WFH has immediate implications on occupier demand. It is however a case of different strokes for different sectors and workstreams,” says Pieter Strydom, Commercial Asset Manager, Redefine Properties.“For sectors like legal, consulting, architecture and design to name just a few, the office is a vital anchor for knowledge sharing, innovation, learning, collaboration and meaningful engagement. Major corporates know they need to maintain a headquarter to attract talent and this wisdom is not lost to them. It is vital however to make the office appealing, offering an engaging work environment drawing people back to the office by choice.”Not all the news for office sector is bad. According to Redefine, the vacancy levels for its P-grade offices reduced during the last quarter. Tenants are capitalising on current market conditions to improve their existing office environments, from a cost, quality, efficiency and amenities perspective. This consolidation while driving demand in P-grade assets, is also forcing a growth in secondary asset vacancies.“This upward migration has opened up secondary space ripe for repurposing for alternative uses such as co-working, storage, education, residential and other amenities. We foresee a growth in co-working in the longer term as businesses settle into the new normal of a centralised head office and remote working from co-working spaces and home environments,” adds Strydom.“Opening a second office might not have made sense historically, but with work life balance a bigger priority for the younger generation entering the workforce, it makes sense to be closer to talent pools. Moreover, these co-working offices will directly benefit retail and residential markets, a win-win for the sector.”Empty offices in markets like Singapore and South Korea have attracted the eye of their governments who have expressed interest in converting commercial real estate into housing. Redefine has no such plans at present confirms Strydom who believes that the REIT is well diversified with office, retail and industrial holdings.While remote working is here to stay, the consequences of working from “home alone” will sooner than later be reflected in the diminishing work culture, inhibiting innovation and hampering collaboration. Many will still yearn for a place to connect in person and co-working spaces are uniquely positioned to fill the void. In the South African milieu, the broader remote workforce also faces challenges from rolling blackouts and poor internet connectivity.Lastly, Occupational Health & Safety Act (OHSA) requirements place responsibility on companies in its capacity as the employer and with no case precedent for the purpose of compensation if an employee sustains occupational injuries while working from home, it is one of the grey areas which many corporates haven’t really addressed.“Like the virus has mutated, the sentiment towards working from home might too. While some will be eager to return to the offices, some others might revel in the social isolation of working from home. There is little doubt that the offices vacated at the end of March 2020 will not be the offices people will return to.”
Johannesburg, 22 February 2021 – JSE-listed REIT, Redefine Properties, says its balance sheet is in a stronger position than it was before the COVID-19 pandemic struck and that it should be well-positioned to take advantage of opportunities by the end of the financial year in August.Speaking during a pre-close media briefing ahead of its February interim results, CEO Andrew König said 2021 is expected to be a key turning point. “The strategic initiatives put in place prior to the COVID-19 pandemic a year ago are well advanced and will position us for the eventual upward cycle”.The major focus for Redefine in recent months has been on preserving liquidity and protecting its loan-to-value ratio (LTV) in the face of ongoing COVID-19 uncertainty, a new variant of the virus and a dreaded third wave of infections.“We are confident we will be able to continue to improve our position by the end of the financial year and will be back to a situation where we can look at expanding and growing the business, with 2022 expected to look better.”While 2020 was the worst year in history for listed property, a rebound will hinge on a successful rollout of the vaccine, and diminished chances of further upsurges of infections. “COVID-19 taught us a lot of things – to reset our sights, not be overambitious and be realistic. Prior to the crisis, Eskom was our country’s chief economic risk, but COVID-19 quickly usurped that situation, although recent load shedding has not helped matters. Fortunately, the prospects of a successful vaccine rollout is now providing much needed confidence,” says König.With all eyes on the Finance Minister ahead of Wednesday’s Budget, König says the market will welcome growth-orientated reforms to further improve confidence levels. However, the ongoing uncertainty and evolving unknowns, means Redefine cannot yet provide market guidance on distributable earnings for 2021.But König says the strategy remains to continue to sell non-core assets to lower the LTV ratio rather than raising equity at highly dilutive pricing. In this regard, the sale of Australian student accommodation asset Leicester Street in December returned R2.5bn and R1.2bn of local disposals have been transferred during the last six months.Reits are focusing on reducing their LTV ratios and König says “we are trending the right way, albeit slowly having chosen the tougher route” to getting back to the sub 40% level. A key risk is the impact of ongoing uncertainty on asset valuations.The interim dividend decision for 2021 will be made at the time of approving the release of the half year results.“We can’t pre-empt the outcome of deliberations on whether an interim dividend will be paid, but we will always act in the best interest of all stakeholders, while complying with all our regulatory obligations,” says König.At the end of August 2020, the group’s local assets, which include Centurion Mall, premium office buildings Alice Lane and Rosebank Towers, were worth R65.4bn and its offshore assets R15.6bn. “We are in the process of obtaining asset valuations for the half year, but it is evident that most of the pain was taken last year and the decline in value is expected to not be more than 3% - and could be even less,” says König.“We are focusing on the variables we can control in this environment to position ourselves for the eventual upward cycle. By positioning our asset platform to be diversified in SA across the retail, office, and industrial sectors and geographically through Polish logistics – which is doing exceptionally well – and Polish retail, we have simplified our asset platform and eliminated a number of risk universes. As a consequence, we are well positioned to withstand prevailing market conditions,” says König. Going forward, Redefine’s strategic priorities are centred on fulfilling its purpose to create and manage spaces in a way that changes lives. This is being done through collaboration, innovation, and differentiation.“We need to be relevant to users’ evolving needs. We need to be agile and alert to the changing operating environment to ensure we are constantly refining our portfolio to remain relevant. We are fortunate to have repositioned Redefine with a capital structure that is well placed to thrive in the new normal,” concludes König.
Redefine Properties’ Board resolves not to declare FY2020 dividendRosebank, South Africa, 22 January 2020: JSE listed diversified real estate investment trust Redefine Properties has announced the decision by its Board to resolve to not pay a dividend in respect of FY2020 in the face of ongoing Covid-19 uncertainty. The Board explained that it had considered the needs of all stakeholders in the context of a rapidly changing trading environment. The decision is consistent with Redefine’s focus on preserving liquidity, protecting its loan to value (LTV) ratio and maintaining its REIT status, whilst complying with the solvency and liquidity test contained in the Companies Act. The Board considers this to be the most pragmatic course of action until the impact of Covid-19 becomes clearer. This is the first time in Redefine’s 22 year listed history that it has not declared a dividend, but the decision follows that of many other companies globally and locally in the face of ongoing uncertainty. The decision whether or not to pay a dividend was also necessitated, after the JSE disallowed an alternative distribution mechanism, which Redefine had proposed last year.In order to retain its REIT status, Redefine is required to distribute at least 75% of its total distributable profits as a cash distribution to its shareholders by no later than six months after its financial year end, which is subject to meeting the solvency and liquidity requirements of the Companies Act.Redefine CEO, Andrew König, explains that Redefine will not lose its REIT status following this decision. “The Board concluded that, while Redefine clearly satisfies the solvency leg of the solvency and liquidity test, there may be insufficient headroom to absorb any further material negative LTV triggers if a cash dividend was paid, which could potentially lead to a breach of the LTV debt covenant ratio with one or more funders after the 28 February 2021 measurement period and result in adverse liquidity consequences.”A REIT's obligation to make the minimum 75% distribution is contingent upon its Board reasonably concluding that the REIT will satisfy the solvency and liquidity test after having paid such minimum distribution.“Facing unprecedented operating conditions in the real estate sector and little visibility into the future as a consequence of the outbreak of the second and possibly more waves of the pandemic, we believe we have no choice but not to declare a dividend as a means of preserving shareholder value and protecting our balance sheet,” adds König. “We are working hard to streamline our asset platform and strengthen the balance sheet to withstand the ongoing volatility and uncertainty, at the same time ensuring we are poised to benefit when conditions improve. We will return to a consistent cycle of dividend payouts as soon as we have greater visibility of the impact of this pandemic on trading conditions.” The board’s assessment was that the company’s LTV debt covenants on the assumption of no further adverse market circumstances would not likely be breached. However, given the ongoing and potential adverse impact of the Covid-19 pandemic, it needed to take into account the possible impact of factors outside of Redefine’s control and which may materialise within the 12 month period after payment of the dividend. The factors at play include the impact of foreign exchange fluctuations, property valuations, valuations of investments, timing of LTV reduction interventions including disposals, the outbreak of subsequent waves and any associated increased and extended lockdown regulations locally and internationally. “Capital and liquidity are the order of the day. The near-term outlook is clearly challenging and without precedent; however, we are confident that over time the strength of our portfolio both here in South Africa and Poland, rigorous balance sheet management, rationalisation of our asset base and in particular, our cash-flow generation capabilities will shine through,” adds König in conclusion. “We are hopeful that the global roll out of vaccines and our government’s own efforts to acquire some 20 million doses during early 2021 will return confidence to the markets. Redefine remains a financially sound business with a capital structure that is well placed to absorb a prolonged period of uncertainty.”
Distributable income for year ended 31 August declines 49% due to dividends withheld offshore, impact of hard lockdown locallyJohannesburg, 1 December 2020 – Redefine Properties, which turned 21 as a listed company this year, is well placed to benefit from logistics growth in Poland after hard lockdown restrictions locally and dividends withheld by offshore investments significantly dampened results for the year ended 31 August 2020.Results for the year ended 31 August 2020 showed how the tough trading conditions locally and overseas brought on by COVID-19 served to drag distributable income per share down by 49.0% to 51.50 cents, from 101.00 cents last year. Total revenue, however, showed only a marginal decline of 0.1% and signs of green shoots have begun to appear. Collections from tenants increased to a pleasing 96% and 97% of billings during September and October after averaging only 84% during the worst of the COVID-19 crisis.“Redefine continues to streamline its asset platform and strengthen its balance sheet to withstand ongoing volatility and uncertainty, at the same time ensuring it is poised to benefit when conditions improve,” says CEO, Andrew König.An offshore asset base valued at R15.6 billion (FY19: R22.6 billion) – compared with diversified local property assets of R65.4 billion (FY19: R72.8 billion) – continues to provide adequate geographic diversification. And while Redefine is in the process of exiting the Australian market, it is building a pipeline of exciting opportunities in the Polish logistics space.“We have put in the hard work and are making great strides towards building tangibly for the medium term. We are leveraging off operational efficiencies, making significant inroads in reducing our loan-to-value ratio, being ruthless rather than reckless in right-sizing our asset footprint, and are set to benefit from growth in Poland,” says König.König puts the Polish expansion potential into perspective: Gross leasable area of 527 000 square metres has been expanded by 160 000 square metres and there is a pipeline to take this exposure to well over a million square metres over the next year or two, utilising the EUR163 million (R3.2 billion) sourced from introducing an equity investor into European Logistics Investment.“We are still expanding despite constraints to the capital base and see a lot of opportunity in logistics in Poland, based on the impetus placed by the government on infrastructure investment, but also thanks to growing demand for warehouse space as more people move to e-commerce channels,” he says.He also points out that Redefine is not distressed from a cash point of view and has “a lot of liquidity to come our way, having concluded disposals totalling R13.4 billion, of which only R7.1 billion was banked in 2020.”During the year, local property disposals realised R894 million, the exit from RDI REIT PLC raised GBP106.3 million (R2.3 billion), and the residual investment in Cromwell was sold for AUD53.3 million (R674.6 million).Redefine’s top priority during the year under review was to address the group’s loan-to-value ratio, says CFO, Leon Kok.“Our LTV improvement initiatives – which included being the first SA REIT to implement a dividend payout policy and exiting non-core investments in the UK and Australia – yielded an LTV reduction of 5.7%. However, the destructive impact of COVID-19 had the opposite effect on asset values, increasing the LTV by 7.8% – negating the improvement initiatives,” he says.“Work on the LTV is therefore not yet done, and to achieve a sub-40% LTV by August 2021, will require further initiatives. A clear pathway has been set to achieving this target, involving further optimisation of the property asset base, limiting the cash outflow from dividends, as well as the completion of the sale of our interest in Journal's two student accommodation properties in Australia,” he says.In the interim, Redefine’s board has deferred a decision on the declaration of a dividend until February 2021, as it is working on a mechanism to ensure there is no adverse impact on LTV from the payment of a dividend. This is subject to the requisite regulatory approvals, and shareholders will be informed as soon as this has been concluded, with full details on the timeline and structure to be provided.“I believe we have set a new floor on our asset value to sustain value creation going forward, having recorded core asset valuation write-downs of R9.8 billion,” says König. However, this does not escape the stark reality that Redefine’s local property portfolio performance was heavily impacted by the restrictions imposed by government to curb the spread of the virus. Kok says rental relief packages to support the sustainability of tenants amounted to R318.5 million, while the provision for credit losses has increased by R310.4 million. Kok reports that the active portfolio vacancy rate increased during the period to 7.4% from 5.1% in the same period last year, while the tenant retention rate was 90.8%, from 92.2% a year ago.The role of ESG has been elevated with Redefine reaching the milestone of having its hundredth building green star rated during the financial year and was also the first local REIT signatory to the UN global climate change compact.König adds: “We are delighted to announce that Ntobeko Nyawo has been appointed as the company’s chief financial officer from 1 March 2021, which frees up Leon Kok to take over as chief operating officer from David Rice who recently retired.” “COVID-19 has accelerated the execution of our strategic priorities, and we have worked very hard in deepening engagement with intensified collaboration and heightened our focus on ESG, with more to come in the new year,” says König. However, he says the outlook continues to be vulnerable to the performance of offshore assets after the rationalisation of the asset base.“We are focusing on liquidity and cash flow management but remain mindful of the opportunities that are presenting themselves. We are building for tomorrow today through collaboration, differentiation and innovation.“We are looking through the short-term challenges and trying not to be distracted from our purpose, so that we become more relevant to our users’ needs and continue to attract and retain quality tenants, which is the lifeblood of our business,” concludes König.
Johannesburg, 1 December 2020 – Redefine Properties (JSE:RDF) has appointed the highly experienced Ntobeko Nyawo as its new CFO, with effect from 1 March 2021.A seasoned executive and qualified CA with over 16 years’ experience, Ntobeko joins from Stanlib, where he currently serves as chief operating officer (COO). Prior to that, he was chief financial officer of Alexander Forbes Emerging Markets, responsible for driving African expansion in partnership with the chief executive officer.“We are delighted to welcome Ntobeko to our team. His depth of experience as a finance and investment executive, on audit and risk committees and in key transformational roles, including in the migration to digital channels, makes him an ideal candidate to add significant value to the core leadership of our business,” says Redefine chairperson, Sipho Pityana.“This appointment also frees up Leon Kok to take over as COO at a crucial time. Leon’s depth of experience in finance and property and his leadership will help take us forward as we chart an exciting new path, while navigating ongoing economic volatility,” concludes Pityana.
Rosebank, South Africa, 16 November 2020: The weeks that followed the hard lockdown at the end of March have been inconceivable for retailers. The measures undertaken by the Government to reduce the transmission of the coronavirus that included mandatory isolation brought a sizeable chunk of the economy to a standstill. Retail, one of the mainstays, ground to a halt as a consequence with only essential retail permitted to remain open and trade. The unprecedented measures in large part can be credited for SA’s stellar management of the public health crisis which has been said to be better than most developed countries. With most parts of the economy now open, and many employees back in the offices, retailers are looking forward in anticipation to the days surrounding the American Thanksgiving holiday, a big draw for cash-strapped consumers. At home, Black Friday conjures up images of snaking queues and crowded stores, however it is likely to be muted this year due to the pandemic, as shoppers will still be expected to socially distance and wear masks in-store. “As part of the health regulations, stores will also be expected to limit the number of people inside at any one time. We are already seeing retailers working around this by extending promotions rather than limiting it to just a few days. We expect to see a Black November or even a Black December as retailers go all out to capture the available rands and cents,” says Nashil Chotoki, National Asset Manager, Retail, Redefine Properties. Creating COVID-19 safe environments for consumers will also differentiate retailers and shopping centres, which can become a driver of footfall and spend. By and large, all sectors in the country and more importantly the retail sector has really played its part in ensuring consumers adhere to public health guidelines by enforcing the mask, sanitising and social distancing rules. With the threat of coronavirus still a clear and present danger, malls and national retailers can’t risk attracting large crowds as seen in the preceding years, often camping outside and queueing for hours for deep discounts. Black Friday is just one more thing the pandemic has upended in 2020. But it isn’t all bad news for consumers. “Retailers are doing their best to safely draw in customers and we have seen a better than expected recovery of retail footfall and sales. Since reopening, convenience malls have been performing better than large shopping centres as customers feel safer, in respect to COVID- 19, in outdoor, open air malls compared to enclosed shopping environments,” adds Chotoki. Black Friday is also getting a pandemic makeover like everything else this year. Instead of waiting for Cyber Monday, shoppers will be able to buy online, any and all discounted products as deals that are usually reserved for in-store shopping will appear online during the month. In and through the pandemic, shoppers moved to the safer confines of ‘online’ in greater numbers, hoping to avoid crowds at stores, promise of contactless payments and retailers were quick to pivot adjusting their online offerings accordingly.“COVID-19 has accelerated online sales, in particular groceries, however most online platforms are still operating at a loss and therefore we expect ‘click and collect’ to be more sustainable due to the lower cost of delivery.” adds Chotoki.“While online sales are growing, we do not anticipate the South African market to reach levels being seen in developed countries in the foreseeable future mainly due to cost, access to the internet and logistics.”Despite the euphoria around Black Friday and the sales surge that follows, retailers are likely to run fewer discounting promotions compared to last year’s “doorbusting” deals as they cannot afford the reduction in margin following the series of COVID-19-related lockdowns. “While retailers have accepted that it is likely to be a muted affair, they can draw comfort from a consumer base that feels a little more confident about spending, thanks to historically low interest rates which have partially cushioned the impact of lower salaries and employment on retail sales,” says Chotoki in conclusion.
Rosebank, South Africa, 5 November 2020: Redefine Europe, a wholly owned subsidiary of JSE-listed diversified Real Estate Investment Trust, Redefine Properties, has completed its purchase of M1 Marki Commercial Centre located in Marki near Warsaw, Poland. Redefine Europe will acquire M1 Marki from the Chariot Group for EUR58.9 million. As part of the transaction, Redefine will sell its 25% equity interest in Chariot Top Group B.V. the sole shareholder of Chariot Group back to the company for EUR55.2 million. M1 Marki, with a gross lettable area of approximately 47 444sqm, comprises two main retail buildings, the M1 shopping mall and a stand-alone Obi DIY store, as well as three smaller buildings (Norauto, Burger King and a Shell petrol station). The centre along with neighbouring properties (IKEA, Decathlon, Agata Meble and Homepark Targowek retail park) forms one of the biggest retail clusters in Warsaw. Andrew König, CEO, Redefine Properties says, “The transaction simplifies our offshore asset platform and also facilitates the exit of a minority held investment yielding non-recurring income in exchange for a wholly owned asset generating a recurring income stream.”“Poland is an attractive market for us due to its size and scale and M1 Marki is located in Warsaw’s premier retail node. The transaction aligns to our strategic intent of buying into assets which offer good long value appreciation prospects.”Redefine Europe was set up by Redefine in 2018 for the purpose of holding Redefine’s European property assets. The sale of Redefine’s Australian student accommodation portfolio comprising Uni Place, Leicester Street and Central, Swanston Street has now received the greenlight from the Treasurer of the Commonwealth of Australia. Accordingly, settlement of the Uni Place, Leicester Street sale agreement is expected to be completed on or about 11 December 2020. The settlement of Central, Swanston Street remains subject to COVID-19 pandemic travel restrictions and carries a long stop date of 30 June 2021. “Our asset platform has been significantly readjusted for prevailing conditions and we are now more focused on a single external geography offshore in Poland. This simplifies our asset platform, improves our risk profile, bolsters our liquidity position and eases our loan to value ratio, which has been under a lot of pressure,” concludes König.
Soweto, South Africa – 04 November 2020: In a move that will help community organisations build capacity and sustain themselves, now more than ever in the post-pandemic era, JSE-listed diversified Real Estate Investment Trust, Redefine Properties, has launched two programmes, one for Non-Profit Organisations (NPOs) and one targeting Small, Micro and Medium Enterprises (SMMEs) in Soweto. The programmes, designed to support NPOs and SMMEs working and operating in the communities, started on 1 September 2020, and will run over a period of 12 months. In addition to causing a global public health crisis, some of the measures taken to prevent the spread of COVID-19, such as lockdown and social distancing slowed down the ability of SMMEs to contribute meaningfully to the economy. Also, the severity of the pandemic drowned out other development issues outside of healthcare. Non-profits tackling key issues in the community now need to raise the visibility of their advocacy projects to attract funding.These development programmes are the first to be undertaken following community engagements conducted late last year. Redefine held workshops with the community around Maponya Mall as part of its Challenge Convention, an asset-based community development initiative. During the Challenge Convention a number of key stakeholders highlighted the real challenges the community was faced with.Three main priorities emerged during these discussions at the time, support for NPOs, SMMEs and the youth. Supporting the recovery of this vulnerable cohort presents a golden opportunity to build on the strides they were making before COVID-19 in creating jobs and developing communities. “As communities around our properties attempt to revive the economy, SMMEs face the same question as us, how do we reopen? How do we reinvent our business model? says Marijke Coetzee, Head of Marketing and Communications, Redefine Properties.“It is critical that we continue to build the resilience of projects already being run in the communities and also make sure the SMMEs are capacitated to grow and prosper in a constrained economy. The programmes target people and projects where they can have the greatest economic and social impact.” The NPO Development Programme will be implemented by the NSBM Consortium, which includes the National Institute Community Development and Management Trust, South African Association of Youth Clubs, Be Unlimited and Mvelwabo Living Lounge. The programme consists of 12-module outcomes-based training and includes formative and summative assessments of all the participants. It will also focus on key skills like financial management, operations, governance, compliance, leadership and knowledge transfer vital to running successful NPOs as well as leadership development, coaching and mentoring. 12 local NPOs operating around the Maponya Mall in Soweto have been selected, and each NPO will in turn elect three individuals to attend the training programme. The programme will include:• 25 days of contact time • 360 hours’ worth of coaching and mentoring• Six hours of leadership and personal transformation sessions per candidate • 18 hours of collective reflective sessions on interpersonal dynamics and team development throughout the yearThe SMME Development Programme will be implemented by Siwaju Consulting. The programme is aimed at building businesses to survive and thrive in a constrained economy and create employment opportunities for the local youth. It will target businesses at various stages of their development, both in the informal and formal sector. 30 individual entrepreneurs have been selected to participate in the programme and will consist of the following outputs:• 18 days of contact time• 240 hours of business coaching and mentorship• An online learner management system which will host e-learning material and a knowledge library for the participants to utilise throughout the periodGiven the existing challenges of COVID-19, and restrictions on gatherings, the programmes will be delivered with strict adherence to health guidelines including measures not limited to social distancing, sanitising, wearing of masks etc. Both programmes will use a blended approach to enhance learning and development including online classroom presentations, one-on-one business coaching as well as digital learning. All participants in the programmes will be provided with the tools required to ensure that learning outcomes are not constrained by not having access to technology. The implementation of the Youth Development Programme will coincide with the formalisation of “The Hub” at Maponya Mall. The multi-purpose space will seek to address the needs identified by the community, particularly the youth, to connect them to resources that will promote participation in the local economy. Further details will be announced in due course. “Investing in the communities is about community engagement and this is at the core of Redefine’s way of business, leveraging spaces we manage to change the lives and the future of the people and communities around them. The Challenge Convention is our investment in local people and projects to solve local problems,” adds Coetzee in conclusion. “I want to take this opportunity to thank the partners who have come on board to help us deliver on the commitments we made to the community.”
Rosebank, South Africa, 23 October 2020: While sentiment towards global real estate has fallen sharply, the outlook for the Polish logistics sector is proving to be COVID-19’s silver lining. Exceptional demand from tenants for space close to urban clusters, growing preference for e-groceries and a rethink of supply chains are combining to drive the sector forward according to Poland-focused European Logistics Investment (ELI). Since 2018, Netherlands based ELI, in which Redefine Properties has a 46.5% equity interest, has developed eight assets, with another five under construction, and six under due diligence for future development. ELI consists of a Polish-focused logistics platform of approximately 527 000sqm of standing assets, 145 000sqm of assets under development and over 1 million sqm of potential development pipeline. Andrew König, CEO, Redefine Properties says, “We continue to prioritise efforts and leverage opportunities to expand through the development of well-located assets occupied by high-quality tenants. Our strategy is centred on creating a well-diversified and leading Polish logistics platform capitalising on the strong economic and real estate fundamentals in the sector.” The sector’s buoyancy can be attributed to factors like construction lead times, which tend to be relatively short, as well as low capital expenditure. In times of volatility, assets that require smaller capital outlay can be appealing because of their capacity to preserve investor returns. “We see a huge potential to create a large and diversified portfolio with a good mix between built-to-suit, inner-city, multi-tenanted and single-tenanted developments in prime nodes. Over the next five to seven years, we will be looking to increase our Polish industrial assets to up to 2 million sqm in size and target EUR1 billion in gross asset value,” adds König.“Poland is a prime location for the logistics sector due to the country's position in central Europe. Moreover, it is a liquid real estate market with high investor appeal and producing hard currency free cashflow.” Occupier demand in Poland continues to be driven, among other factors, by e-commerce with small warehousing units within the inner city areas and last mile facilities close to urban centres much in demand and leading to higher rentals and asset values. Poland is also fast becoming a significant logistics hub for international players and is very competitive compared with Western Europe in terms of rental rates and labour costs. “The industrial sector had its best six months, until June 2020. Twenty deals with a total volume of almost EUR1.2 billion were recorded, mainly driven by large portfolio transactions. Prime warehouse yields stand at 6.25% with quality assets, with long leased assets trading at sub 5.00%, and Warsaw inner city projects at around 5.50%,” says Pieter Prinsloo, Redefine Europe CEO. “As the popularity of online shopping grows, the demand from occupiers will also increase. During the pandemic, consumers rediscovered the convenience of online shopping, even adding groceries to their checkout baskets. As retailers and logistics firms race to deliver a seamless experience and faster services, demand is likely to rise sharply for light industrial properties in close proximity to city centres”. The sector benefitted from a spike in e-commerce and courier service activity during the COVID-19 period resulting in some tenants taking short-term leases to secure additional space. This was as a result of many companies holding greater amounts of inventory to buffer their supply-chain responsiveness. Poland is also seeing a wave of new businesses wanting to move manufacturing away from Asia and closer to customers in Europe. The supply chain disruptions from COVID-19 is proving to be the biggest motivator. “Quality assets are our competitive edge and we have a substantial development pipeline in prime investment markets and locations. Our efforts to strengthen the balance sheet continue and where we can, we will refinance developments on completion at better interest rates as the lending market improves,” concludes König. “We follow a simple recipe for success, secure long-term leases with high-quality tenants, maintaining low operational expenses while optimising capital structures, as well as ensuring transparency and regulatory compliance. We focus on creating sustained value.”
8 October 2020 - The COVID-19 pandemic continues to wreak havoc everywhere – and South Africa is no exception. At Redefine we are continuing to adapt to the “new normal” and are ensuring our business is on track and functioning well.We will provide more information on our plans and strategic initiatives during our upcoming annual results presentation in November.Please be aware, however, that in order to accommodate the external auditors’ requirement for added audit emphasis, particularly around asset valuations as a result of the impact of the COVID-19 pandemic, the finalisation of Redefine’s financial results for the year ended 31 August 2020 (“financial results”) may be delayed. Accordingly, the announcement of our annual results has been postponed from Monday 9 November, to Monday 30 November 2020.
Rosebank, South Africa, 06 October 2020 - JSE-listed diversified Real Estate Investment Trust (REIT) Redefine Properties is pleased to announce that it has reached a mutually beneficial and alternative arrangement relating to the conclusion of the sale of the Mall of the South (MOTS). As part of the agreement, the 73 111sqm regional shopping centre in Aspen Hills, south of Johannesburg will be acquired by a limited liability special purpose vehicle (SPV) for R1.76 billion in cash. RMB Investments and Advisory Proprietary Limited will hold an 80% equity interest in the SPV and Redefine 20%. The deal will be funded through a loan agreement with RMB. The transaction is expected to close before 1 November 2020 once all conditions are met, including approval by the Competition Commission and other usual approvals. Construction of MOTS began during 2013, and at that time the property was considered to be an attractive asset to complement Redefine’s retail property portfolio. In order to secure participation in the development, Redefine entered into a structured financing transaction with Zenprop and RMB, which would allow or require Redefine to purchase MOTS upon the occurrence of certain events. “Given that circumstances had changed dramatically, clearly unforeseen at the time of entering the put agreements, all the parties agreed to engage constructively to restructure the put arrangements,” says Andrew König, CEO, Redefine Properties. “The restructure allows additional time for MOTS to recalibrate to the post-COVID-19 retail real estate environment and provides Redefine with the opportunity to either acquire or dispose MOTS over a three-year period. We do not anticipate the restructured arrangement to have a significant adverse impact on our loan-to-value ratio.” König reiterated his views expressed at the pre-close briefing for the year ending 31 August 2020 that “property fundamentals are going to be challenged for the rest of 2020 and beyond” due to unprecedented and evolving market conditions. The coronavirus pandemic has dealt a blow to retail tenants and landlords already struggling with declining disposable incomes and a sluggish economy. The public health crisis temporarily closed malls nationwide at the end of March, when the Government enforced a strict lockdown, the hardest the world has seen. The transaction constitutes a category 2 transaction in terms of the JSE Listings Requirements and is not subject to approval by Redefine shareholders.
18 September 2020 - Our consistent ranking is a testament to our commitment to the highest standards of environmental, social and governance reporting and ethical approaches in our disclosures. It also underscores our approach to integrated thinking and the partnerships we share with our stakeholders by presenting information in an engaging and transparent manner. A top 10 honouree since 2015, Redefine has made it two in a row with a third place with honours ranking this year in the latest EY Excellence in Integrated Reporting awards for the top 100 JSE-listed companies.Our integrated report celebrates our efforts to improve the built environment for people and communities by creating, managing, and investing in spaces in a manner that changes lives. The report has grown to become a crucial tool in communicating to our stakeholders, the material economic, social and environmental impacts, risks and opportunities in building a sustainable business. Redefine was yet again the only REIT in the top 10.The purpose of the awards is to encourage and benchmark standards of excellence in the quality of integrated reporting to investors and other stakeholders in South Africa’s listed company sector. The awards are based on how well companies explain to stakeholders how they create value over time.The recognition strengthens our resolve to further embed key sustainability issues in our strategy and present information in a manner that enables stakeholders to analyse and assess our ability to create and sustain value in the medium- to long-term horizon.Property is our business, but our values run deep into our ethical foundation like roots. Our emphasis on monitoring, measuring and reporting on our ESG obligations has allowed us to thrive and enabled Redefine to be transparent and accurate in reporting into all aspects of performance. It also guides the strategic choices we make and enables us to stay on course to deliver sustainable value.According to the adjudicators, the best reports provide an understanding of short- to long-term risks while providing an excellent description of the group’s business model, including primary business activities as well as the outcomes.While we have developed our ESG strategy over the past few years, the COVID-19 pandemic has underscored the importance of embedding ESG considerations in our business strategy to ensure sustainability and has prompted us to accelerate the execution thereof.The recognition once again demonstrates our leadership in integrated reporting and highlights our commitment to transparency, disclosure and value creation. We are deeply encouraged and will continue to integrate sustainability considerations into everything we do.
Rosebank, South Africa, 27 August 2020 – Redefine Properties has entered into a temporary agreement with its Debt Capital Market investors to relax the corporate loan-to-value (LTV) covenant from 50% to 55% for the measurement periods of 31 August 2020 and 28 February 2021. The resolution was approved with overwhelming support, with 98% of the value of the votes cast in favour of the relaxation. Pursuant to the Terms and Conditions of the Domestic Medium-Term Note Programme, noteholders approved that following the financial half year ending 28 February 2021, the LTV covenant will revert to 50% for the financial year ending 31 August 2021 and thereafter.“The agreement provides us with additional headroom to absorb anticipated headwinds brought about by the COVID-19 pandemic,” says Andrew König, CEO, Redefine Properties.“We deeply appreciate the support and confidence in Redefine shown by our Debt Capital Market investors, as well as the collaborative spirit adopted by all parties to achieve an outcome which is in the interests of all stakeholders.”At the pre-close presentation, Redefine confirmed that its asset platform had been significantly readjusted for prevailing conditions, and the company was now more focused on a single external geography offshore in Poland. The reduction in geographies was to reduce the overall risk profile, improve the liquidity position and ease the loan to value ratio, which has been under a lot of pressure.“As the economy recovers, we will emerge stronger with an enhanced ability to execute on our key strategies which include managing risk through a streamlined, more focused offshore asset platform and zoning in resolutely on high-quality, well-located domestic assets,” König adds. The early action on balance sheet strengthening and selling non-core assets has meant that Redefine has access to R3.8 billion in undrawn access facilities, while having liquidity headroom to absorb as much as a 50% rental decline and 100% dividend withholding from foreign investments.
Johannesburg, 24 August 2020 – Managing risk through a streamlined, more focused offshore asset platform and zoning in resolutely on high quality, well-located domestic assets have helped Redefine lay the foundations for future growth when the COVID-19 uncertainty and volatility slows.However, at the same time, CEO Andrew Konig tells investors in the pre-close briefing for the year ending 31 August that “property fundamentals are going to be challenged for the rest of 2020 and beyond” due to unprecedented and evolving market conditions.Konig says Redefine’s asset platform has been significantly readjusted for prevailing conditions and the company is now more focused on a single external geography offshore in Poland.“This reduces our risk profile, improves our liquidity position and eases our loan to value ratio, which has been under a lot of pressure.”The sale of Redefine’s stake in UK fund RDI Reit for R2.3bn in June has enabled it to focus on local and East European investments. Other recent changes to streamline the business include the sale of its 90% interest in two Australian student accommodation facilities, as well as its residual interest in Cromwell Property Group. The elimination of non-recurring income also comes on stream through the acquisition of 100% of the equity value in M1 Marki from Chariot for Euro 122.8 million. Redefine owns 25% of Chariot, which will be disposed of, as part of the transaction, to settle the bulk of M1 Marki’s purchase consideration. CFO Leon Kok tells investors that early action on balance sheet strengthening and selling non-core assets means Redefine has undrawn access to R3.8 billion in cash, while having liquidity headroom to absorb as much as a 50% rental decline and 100% dividend withholding from foreign investments.Says Kok: “We have not yet seen a dramatic loss or material increase in lease cancellations – which is why our attitude towards rental relief has been generous. While we realise there may be short-term pain, our emphasis remains on sustainability as we would rather retain tenants for the long term.” He says stringent liquidity and risk management practices – which were established well ahead of COVID– now stand the company in good stead. “We are fortunate to have sufficient headroom to absorb headwinds if the recovery is slow.”He says rental relief in the second half has amounted to approximately R270m, with an increase in rental arrears of approximately R400m over the five months of the various levels of lockdown. Average cash collections over this period have amounted to about 82% of monthly gross billings. However, the brunt of this occurred during the hard lockdown in April and May and it has since “recovered to some extent”.Embracing its commitment to sustainability, Redefine supported its suppliers despite not being in receipt of any or receiving limited service delivery, such as cleaning and security services, so they did not have to suffer layoffs.“This has ensured our relationships remain entrenched and places us in a strong position to continue providing high quality services during and after the lockdown,” says Kok.However, he emphasizes that the next three months “remain critical, as the economy and property market is not out of the woods yet”. The focus therefore remains on keeping liquidity levels bolstered, focusing on cutting back on non-essential expenditure, while still supporting tenants through rental relief.Following recent news that Redefine disputed the validity of the put option exercised by property investment and development company Zenprop and RMB to sell the Mall of the South, Konig is pleased to tell investors that the parties are engaged in constructive discussions to resolve the dispute, which is expected to result in a mutually satisfactory outcome for all the parties. Konig says the hard work done to right size the footprint of the capital base has provided space to expand development activity in the logistics sector in Poland, which is offering attractive investment opportunities in an expanding market, which is expected to yield capital growth from further yield compression. “The European logistics platform is expected to grow significantly through exciting new opportunities on our doorstep, funded through our equity partnership with Madison.”Two recent completed developments in Poland of over 40,000 square metres add to an exciting further pipeline of seven projects of just over 189,000 square metres, which are 75% pre-let at an average income yield of 7.1%, and all funded via proceeds from the Madison transaction.Konig points out that Redefine has “done very well at working from home”, leveraging off its IT platform and instilling a culture of innovation and learning.“Our early commitment to refreshing our values, culture and focusing on our people has seen us make great strides in facing and overcoming this crisis together,” he says.“Our purpose remains to create and manage spaces in a way that changes lives and we have, for instance heightened our focus on ESG initiatives to further protect property values,” says Konig.Renewable energy remains a key strategic focus, with capacity expanded to 25.9 kw peaks during the period. “We will carry on ensuring the rollout of green energy and at the end of this financial year will have 100 office properties that are Green Star rated,” says Konig.“COVID 19 has intensified and sharpened pre-existing challenges. But we have done the hard yards and now stand in good stead as we prepare to enter into recovery,” he concludes.