Johannesburg, 16 May 2022 – Redefine Properties (JSE: RDF), which has a diversified property asset platform worth R71.0 billion, has reported an improvement in its distributable income for the interim period to 28 February 2022. It has delivered distributable income of R1.5 billion, representing growth of 5.9% through a continued focus on the variables under its control of investing strategically, optimising capital, operating efficiently and engaging talent.The local property portfolio performance was driven by the easing of Covid-19 pandemic restrictions, with the return of shoppers to the malls under Redefine management, a welcome development. Redefine also expanded its exposure to the Polish retail sector through the takeover of EPP during March 2022, and received a capital boost from ongoing demand for its growing pipeline of Polish logistics developments.While the board had resolved not to pay a dividend during the volatile and highly uncertain Covid-19 period in 2020, this resumed in 2021 and an interim dividend of 23.69 cents a share has been declared in respect of the half year ended 28 February 2022.“Our results a year ago were in the face of one of the most challenging times in living memory and while greens shoots started appearing recently, along came the war in the Ukraine. If we have learnt anything it is that we can continue to expect the unexpected. For our stakeholders, though, our integrated approach to making strategic choices, managing risks and focusing on quality has ensured we continue to sustain value creation,” says CEO Andrew König.He expects the challenging global economic environment to persist “for the medium term at least”, but South Africa does have an opportunity to benefit from growing demand for natural resource exports. The war in Ukraine, however, is having indirect global impacts in the form of higher inflation, exacerbating the risk of more aggressive interest rate hikes.“Inflation hits everyone through higher food prices and higher energy costs and so while the fallout from the Covid-19 pandemic starts to move out of the system – bar lingering effects – we are seeing higher inflation adding pressure and federal banks responding by tightening rates.”During this volatility and uncertainty, Redefine is focusing on its strategic priorities and not getting distracted by the noise.Redefine CFO, Ntobeko Nyawo says a standout feature has been the quality of earnings, with 97% of income now recurring in nature and sustainable. “This speaks to the underlying health and sustainability of the portfolio,” he says.With the recovery to pre-pandemic levels proceeding well, an average collection rate of 101.3% was recorded, backed by very stable credit metrics – the loan-to-value ratio is a healthy 41.9% and interest cover at 2.7 times.“Balance sheet and risk management places us in a strong position to withstand headwinds. Despite recently paying a dividend for the full 2021 year, our liquidity position includes R4.5 billion in facilities and R1.2 billion in cash, which is solid, enabling us to deliver on our core objectives,” says Nyawo.Another decided edge for Redefine in the face of the ongoing volatility is the risk-mitigation effect of its diverse geographic spread of assets. With international real estate investments valued at R11.5 billion representing 16.2% of the Group’s total property assets, it sees blue skies ahead, especially for logistics and the recently expanded retail exposure.“The Ukraine war is not directly impacting our Polish operations and the logistics sector continues to attract significant investor and tenant demand,” says König. He says Redefine realised one billion rand from the disposal of six non-core properties in Poland, which will be redeployed.“There is still very strong tenant demand driven by nearshoring opportunities from the war and ongoing expansion of e-tailing. It is not just Amazon driving demand either – we are noticing light manufacturers moving from the East, Russia and Ukraine to Poland, driving up demand for space. It is a positive story on logistics in Poland,” says König. An unemployment rate of less than 4% also means ongoing consumer buying power.Locally, the focus remains on driving organic growth in a difficult macro-environment. “While demand for office space is generally limited, we are noting a flight to quality as enquiries for high quality well-located offices are growing. Our office portfolio now consists of 88% premium and A-grade buildings thanks to following a disciplined asset management approach of recycling out of secondary assets and reinvesting in our well-located quality assets over the last number of years,” says COO, Leon Kok. Total tenant retention by GLA improved to 95.6% in the reporting period.Meanwhile, new developments in progress are Kwena Square (a convenience retail centre) at an estimated final cost of R174.9 million as well as an industrial development in Brackengate II, Montagu Snacks, (50.1% share) with an estimated final cost of R22.3 million.While ESG was unfashionable seven years ago, it is now something companies ignore at their peril – and Redefine remains ahead of the curve with Sustainalytics ranking Redefine 36th out of 1,045 REITs globally.“We are well placed to benefit from our integrated approach to embed ESG in all aspects of what we do. The importance of understanding and managing our impact on our environment and all our stakeholders was highlighted by the July unrest and recent flooding in KZN,” says Kok.Redefine also implemented a revised senior management structure that creates depth and drives more inclusion and diversity, to create an environment that stimulates innovation.An additional 19.1 MWp of solar PV capacity is being added to enhance value during 2022.“We have responded to the challenges created by the Covid-19 pandemic to reset all aspects of what we do. We have simplified our asset platform and reduced exposure to multiple risk universes and what we have is now beginning to bear fruit. We are primed for creating sustained value as we build the future-fit Redefine of tomorrow,” concludes König.
Redefine wins twin awards for excellence and innovation in facilities managementJohannesburg, 25 April 2022 – The combination of a depressed economy, ageing and deteriorating infrastructure, scarce natural resources and the disastrous effects of climate change is raising the stakes for the property and facilities management sector to drive sustainable and environmentally conscious solutions, says Leon Kok, COO, Redefine Properties.This comes as Redefine Properties is recognised for excellence in its exploration and implementation of sustainable water and facilities management solutions in the past year.Notably, Redefine’s innovation in the use of ground- and rainwater at its Wonderboom Junction Shopping Centre in the city of Tshwane was a standout example of smart conservation in action, securing the award for excellence in facilities management at the recent South African Facilities Management Awards. Walter Nel, Regional Portfolio Facilities Manager at Redefine Properties also walked away with the most coveted award: facilities manager of the year.The Wonderboom project not only addressed the risk of flood damage, which is exacerbated by being located in an area subject to high levels of groundwater, but also supported Redefine’s overall goal to reduce the amount of water withdrawn from municipal and borehole sources. This installation was commissioned in the middle of the Covid-19 pandemic in 2021, and it is especially noteworthy that the success of this means that in future water can be acquired from sources other than bulk municipal water connections.Furthermore, the harvesting, storage and reticulation of rainwater to end-user demand points were devised with locally available products in mind to ease future replacement component availability and to create a template for implementations at other sites in the future. The water harvesting and reticulation system is also supported by solar PV energy.Kok says that Wonderboom’s bulk rainwater harvesting process currently delivers 12% of the annual building demand and the remainder of the building water demand will be supplied from groundwater sources to alleviate pressure and dependence on bulk council water connections.Kok believes that projects such as this are crucial to ensuring available natural resources are collectively optimised, with the benefits of these immediate savings stretching beyond the boundaries of Redefine’s assets to help create a more sustainable future. “We applaud the efforts of our facilities management team to drive innovation and keep the environment top of mind. This is firmly in line with our commitment to be an ESG leader in the real estate markets in which we operate.”
Johannesburg, 10 March 2022 – Bottlenecks of supply caused by the COVID-19 lockdowns are easing, opening the door to exciting commercial sector property growth. But national asset manager for industrial properties at Redefine Properties, Johann Nell, says the market looks very different today – raising the stakes for operators to think outside of the box.“With the capital costs of relocating high, logistics companies, for instance, are looking for a better deal. Instead of just renting one ‘box’, they want a facility that includes add-ons and technology, like racking and other supply chain components, as well as more climate-friendly and secure solutions. There is then one product accessed at one venue and then taken to their customer,” he says.Some tenants also want a vested interest in the properties they rent. Nell explains that some show interest in purchasing the warehousing facilities later in a lease, while others prefer a joint-ownership model.Historically, a landlord would rent out a warehouse and leave the internal design and kitting out to the tenant.Nell says logistics companies are increasingly looking to allocate their capital differently rather than tying up large up-front amounts of working capital into racking, shelving and design. Demand for space in the 10 000sqm space and above is heating up significantly, with limited stock leading to high levels of competition.“There is a bit of a scramble for available space as supply chains open up after COVID-19-induced lockdowns. However, scarcity is also leading to more building activity and innovation,” he explains.Redefine has grabbed the opportunity to convert and retrofit existing facilities to meet the growing needs of logistics and other industrial clients.“The industrial sector was resilient during COVID-19 and is now the flavour of the month, backed by the rebounding growth in the retail sector. There is clearly a growing need for storage space, as commercial companies look to keep more inventory,” says Nell.Nell says an important fillip for the economy is that manufacturing activity is also showing signs of recovery. He says growth in manufacturing bodes well for the economy, as this a key engine room for jobs and sustainable business growth.“There are new opportunities to provide more tailored solutions for manufacturers, especially after the recent riots across KwaZulu-Natal (KZN) and Gauteng,” he says.A major trend is e-commerce driving warehouse consolidation and supply chain expansion, which is increasing demand for new racked warehousing space.Another major trend is smart-tech systems enhancing tenant user experience. Nell says all of these developments mean serviced, developable land remains in high demand.According to researchandmarkets.com, COVID-19 reflected notable changes in retail in South Africa, namely, with a shrinking brick-and-mortar market and accelerated store closures, the business-to-consumer (B2C) e-commerce market grew by more than 60% from 2019 to 2020. In addition, there was a nearly 10 percentage point increase in online shopper penetration in the country from 2019 to 2020.Mastercard has also reported that online retail in South Africa more than doubled in just two years, thanks to the explosion in demand for home deliveries brought about by the COVID-19 pandemic.Improved sentiment in manufacturing is mirrored in recent statistics, with purchasing managers more optimistic about the coming months. According to media reports, a gauge tracking expected business conditions in six months’ time jumped to an almost four-year high of 71.3 points, more than 10 points above last year’s average reading.In the aftermath of the July riots in Durban and disruption to the KZN logistics sector, Nell says there was a demand for short-term warehousing in Gauteng. However, not all companies have been able to relocate due to the costs involved.“So what we are also seeing is increased demand for value offerings – not just a building but a greener building, with solar panels on the roof and with enhanced security. Demand for space in KZN remains solid,” he says.Global trends also indicate exciting potential ahead. According to CBRE, amid record demand in US rent growth and investment activity, industrial real estate “will stay hot in 2022”. E-commerce’s expansion will fuel the need for more warehouse space as will the growing economy, population migration, and the desire for “safety stock” onshore.Interesting trends in Europe, the Middle East, and Africa (EMEA) are also taking shape. BRE surveyed over 100 of the largest logistics occupiers in Europe to gain insights on their expansion plans, current challenges, location and building preferences, and the impact of COVID-19 on their real estate strategies.Nell says, based on these trends, Redefine continues to protect, refine and improve its portfolio, with several projects earmarked for roll-out. “We have embarked on a technology drive to make it easier for end users to manage their businesses and give them the flexibility to structure the facility to suit their operation.”“We will continue to allocate capital where we believe the best market opportunities lie, while participating with other development firms to offer customised and creative development solutions, either through improvements to existing premises or through greenfield developments,” concludes Nell.
The past few months have been tumultuous and volatile for the local and global economies, but Redefine Properties (JSE: RDF) is well positioned for sustained value creation and growth.Speaking during the pre-close for the half year ending 28 February 2022, CEO Andrew König says the company is firmly focused on executing its strategic priorities further in 2022. These include embedding a revised executive committee structure that drives more inclusion and diversity, on-boarding the R26.2 billion EPP portfolio, the introduction of a climate resilience framework and continuing to de-risk and refine the asset platform.“Redefine is now primed for growth after we used the crisis to reset and refine every aspect of what we do. We have exited multiple geographies, optimised what we have and positioned every asset for the best possible sustainable capital and income growth prospects, while entrenching ESG into everything we do,” says König.At a time when growth is constrained for many peers, Redefine is set to expand its asset base and footprint with the takeover of EPP. The transaction received the thumbs up from shareholders in January and the business will be fully integrated into Redefine during the second half of 2022. With all conditions fulfilled, the delisting of EPP is set to take place on 8 March.“This deal is transformative as it is Poland’s largest retail landlord and amounts to an estimated R7.2 billion in additional equity for Redefine and adds around R19.7 billion of total assets onto our balance sheet. This equates to about an additional 19.8% of shares in issue for Redefine. In the next six months we will be focusing on integrating EPP into our business in a sustainable way that maximises long-term value creation,” says König.The strategic reset for Redefine has entailed a recent reconstitution of its executive committee.“We are bringing more depth and balance to our executive committee (ExCo), incorporating a broader range of strategic skills to take us forward sustainably and effectively,” says König. New additions include the Company Secretary, Chief Sustainability Officer, Chief People and Chief Legal and Regulatory Officers.“All the good work, restructuring and refining what we have is now bearing fruit and ensuring we are well positioned to benefit from the eventual upward cycle,” says König.For the future, the focus turns to refining the asset platform further by recycling any remaining unproductive domestic assets. Internationally, numerous logistics developments will be pursued in Poland.“I don’t think there will be fireworks from the SA economy for some time. We are more focused on the variables under our control,” adds König.Redefine CFO, Ntobeko Nyawo says the integration of EPP will support Redefine’s medium-term growth outlook, while the company’s credit metrics remain “very stable”.“We have maintained good liquidity thanks to disposals and strong cash generation. We are actually getting to a point where our recoveries are at 103% as we recover Covid-19 deferrals,” he says.“The quality of earnings is therefore getting more sustainable, enhancing our ability to build and grow,” says Nyawo.Nyawo says a loan to value close to 40% should be achieved in FY2022 based on disposals and earnings generated.COO Leon Kok says while conditions locally remain challenging, there are some signs of recovery, especially in the retail space. He says turnover from retail tenants is now at around 105% of their pre-Covid-19 levels. “The recovery is largely being driven by homeware and essential services, which are now at about 110% of their 2019 levels.”Online shopping has seen significant growth in reported sales, driven by the grocery and pharmacy sectors. However, Kok says all indications point to online and physical retail co-existing. “As a landlord we are looking at ways to embrace that and make sure offerings are more seamless, for instance by accommodating growing demand for click and collect and to also drive loyalty,” he says.The office sector is under the most pressure, with vacancy rates increasing to 16% from 14% before – the highest it has ever been.“I don’t see much in terms of improvement given that a lot of space is available and demand is low thanks to unemployment. However, the key is to make sure we retain the tenants we do have by making sure assets are relevant to their needs. For instance, we are focusing on improved health and safety and sustainability initiatives,” he says.Kok says the office space is beginning to show some signs of life as workers gradually begin to return to physical offices, though in many cases still for only a few days a week.“I think we might see that trend continue as many employers embrace flexible working arrangements.”Kok says the industrial portfolio has remained defensive, with demand for logistics solutions driven principally by the retail growth. “Logistics remains very competitive, but participants are becoming more cost conscious, making cost management critically important,” he says.Kok says Redefine’s diversity across the sectors remains a key benefit. “Over the years we have been actively recycling assets to improve the overall quality of our portfolio. In these uncertain times, I believe the old adage of a ‘flight to quality’ will hold true.”Internationally, Redefine’s logistics pipeline in Poland continues to grow. This includes two projects of 96,917 square metres to gross leasable area (GLA) and further projects of 207,420 square metres under construction to be completed in the next six monthsAnother highlight over the past six months on the international front was the receipt of the proceeds from the sale of the remaining student accommodation property in Australia, during first week of February.As part of its Moonshot strategy, Redefine is driving ESG as a key strategic thrust. Redefine is SA’s first REIT to become a signatory to the UN Global Compact.“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 through focussing on what matters most. We are firmly on track to doing just that,” concludes König.Redefine’s half year results to 28 February 2022 will be announced on 16 May.
Sandton, South Africa: The construction on Redefine Properties’ Kwena Square on the West Rand is progressing well and is expected to be completed on schedule during May 2022. The JSE listed diversified real estate investment trust intends to open the shopping centre to the public during mid-2022. Located centrally in Little Falls, Roodepoort, it features over 10 000m2 of convenience shopping space. The centre gets its name from the Sotho meaning for crocodile, koena (kwena) which accentuates the abundant natural beauty within the Little Falls, Strubens Valley and surrounding areas. The Crocodile River also has its source in the Witwatersrand Mountain range, originating in Constantia Kloof, Roodepoort, which is near the current site. Developed at a cost of R210 million, Kwena Square will house 23 stores anchored by national retailers like Checkers, Checkers Liquor, Clicks and boasts one of the country’s first drive-thru RocoMamas besides other restaurants and coffee shops. Parking bays to accommodate 407 cars at any time have been provided. Already over 60% of the centre has been pre-let to tenants who represent a diverse line of local and national brands. An array of rooftop solar panels will generate as much as 25% of the electricity required by the centre, a key feature which will reduce the load on the main grid. Redefine recently unveiled its Moonshot Strategy setting a target to deliver the smartest and most sustainable spaces by the end of this decade and has since been focusing on energy efficiency and renewable energy to help it to reach its goal. In 2022, Redefine will focus on executing its strategic priorities having introduced a climate resilience framework, striving for more sustainability interventions across its operating environment and investing strategically. Leon Kok, COO, Redefine Properties says, “We are ready to put the efforts in towards meeting our commitment to convert all buildings in our portfolio to net zero carbon, water and waste by 2050. The process has begun with our newer projects and demonstrates our ongoing focus to reduce our carbon footprint. We have an overarching ambition to be a force for good.” A new study by MSCI shows that some areas of retail like convenience shopping centres are seeing a rise in sales and visitors with trading densities exceeding pre-Covid levels. Thanks to time-pressed consumers juggling work-from-home and making quick stops for groceries to avoid crowds, the need for convenience became paramount during Covid-19. “Kwena Square entrenches the trend we first identified on the re-emergence of convenience centres, a shopping format most favoured during the pandemic for its ease of use and open ventilation enhancing safety. The completion of the project during a pandemic reflects our commitment and our tenants’ confidence in the project and the neighbourhood,” adds Kok. “A convenience centre like Kwena Square addresses changing shopping habits and is positioned to efficiently meet evolving demands of shoppers.”
Sandton, South Africa: Redefine Properties says young innovators in the business are informing its perspective on how to solve complex issues facing the industry, while positively shaping the built environment. As part of its Moonshot strategy, Redefine, aims to build the smartest and most sustainable buildings the world has ever known in the regions in which it operates over the next decade.Redefine recently presented the strategy and its impact as one of 32 companies selected globally to showcase their commitment to ESG at the UN Global Compact’s Young SDG Innovator Summit in September 2021.Redefine is SA’s first REIT to become a signatory to the UN Global Compact, a voluntary initiative based on CEO commitments to implement universal sustainability principles and support UN goals. The compact is the world's largest corporate sustainability initiative of its kind with 13 000 corporate participants.The chasm between all strata of society was harshly exposed during the height of the Covid-19 pandemic. The hard lockdown held the mirror to the archaic idea of pursuing profits at all costs, thus forcing many businesses to revaluate their core purpose. The link between ESG, business strategy and risks has never been clearer than during Covid-19.Redefine’s ESG strategy is a step towards strengthening its long-term Moonshot strategy and has the full support of the board, who have sight of the company’s ESG frameworks and compliance.The Moonshot strategy rests on five pathways, one of the critical ones “being a force for good”. Investors, tenants and increasingly communities, are beginning to see commercial properties through different lenses. It is no longer enough for the buildings to be sustainable and be efficient, they also need to contribute to promoting tenant and community health and well-being.With two years already shaved off the decade long timeline for the fulfilment of the Moonshot strategy, Redefine has set itself targets across its portfolio to reduce reliance on grid energy, water consumption, waste-to-landfill as well as fast-tracking green energy projects, especially solar. In the new normal, Redefine sees opportunities in creating ‘liveable’ environments and contributing to better life experiences through sustainable building design principles.“The age-old proverb - if you want to go fast, go alone and if you want to go far, go together, holds valuable lessons in the built environment. While Redefine has a good handle on how to design, build and operate sustainable buildings, the shell or infrastructure represents only a portion of the building’s energy profile. What happens in the tenant space also has a huge impact on the environment,” adds Keke.“Green leases are catching on and we are keen for key tenants to work with us in this regard. These leases encourage tenants to identify and implement alternatives in their own spaces in areas such as energy efficiency, recycling and other environmental priorities etc. We are also walking the talk by digitising all tenant leases, saving as many as 250 pages per lease.”Keke notes the guidance provided by the Green Building Council of South Africa to ensure the “E” in ESG remains front and centre in the built environment as well as the progressive work being done by South African Property Owners Association as well as SAREIT.“Our long-term vision is to help coordinate actions with industry groupings and continue leading the industry by further embedding ESG across the company, in and through how we invest, operate and manage our assets.”According to Bloomberg Green, the global sustainability bond market has performed exceedingly well. The first six months in 2021, saw more ESG-related bonds issued than during all of 2020. And while the sector still represents a fraction of the overall bond market, it is quickly gaining ground, with sovereign investors and others required to account for a certain percentage of their funds going into green bonds.“SA needs more examples of successful sustainable bond issuances so that the sector can benefit from reduced cost of capital,” says Keke.“Redefine’s Moonshot is to ensure that its ESG efforts benefit both the planet and people and encourages the use of its spaces in a way that changes lives. Our scale allows us to implement our innovative approach across a large number of our existing properties and new projects and believe that if we keep the momentum going, we will have a significant positive impact on spaces, people, communities and climate which all makes good business sense.”
Redefine’s popular Alice Lane development, which sets the benchmark for mixed use development, is embracing the Johannesburg-wide “Be Kind” artwork initiative.“Be Kind” relates to a series of 18 art installations around the streets of Johannesburg, the brainchild of Rabbi David Masinter. The aim is to spread positive thinking and upliftment after a difficult two Covid-19 years.Redefine’s National office asset manager, Pieter Strydom, says Alice Lane is giving new meaning to mixed use office space in the Sandton hub and sets the benchmark for developments in the future, which is why partnering on “Be Kind” is seen as an important and relevant partnership for Redefine.“Alice Lane offers a safe, relaxing, and stunning business environment for those who expect only the best. It is therefore a perfect fit as a partner for the ‘Be Kind’’ initiative and we are proud to associate ourselves with a move to lift the spirits of people visiting Sandton and also more broadly, Johannesburg.”Rabbi Masinter is a firm believer in humanity and compassion of people – especially South Africans. The “Be Kind” project aims to embrace the beauty around them and share positivity with everyone in the City of Gold.Alice Lane lives up to these very ideals as it seamlessly integrates state-of-the-art building systems with easy accessibility and convenience. It’s also a sustainable, environmentally friendly development, created with non-toxic materials and built to a 4 Star Green Star status, the first Green Star-rated precinct in the area.
Redefine Properties (JSE: RDF) has received the green light from shareholders to finalise the delisting and takeover of EPP (JSE: EPP), Poland’s largest retail landlord.The deal, which is still subject to finalisation of outstanding conditions precedent and regulatory requirements, amounts to an estimated R7.2 billion in additional equity for Redefine and adds around R19.7 billion of total assets onto its balance sheet.On Friday last week, the key step to finalisation of this significant transaction was completed when the proposal received overwhelming support from both Redefine and EPP shareholders. It entails a share-for-share offer by Redefine to acquire all the remaining shares in EPP it does not already own upon delisting thereof.This will take place at a swap ratio of 2.70 Redefine shares for each EPP share held, to a maximum of 1.1 billion if everyone converts to Redefine shares. Redefine currently holds 45.4% in EPP and on completion of the transaction, the Polish-centred offshore component of its overall portfolio is likely to increase to 30%."I was very pleased and encouraged by the high level of Redefine’s shareholder support, with an approval of 78.3% being achieved," says Redefine CEO Andrew König.He says the support reflects the fact that the transaction ticks several strategic boxes. These include reducing risk, simplifying Redefine’s investment and asset platform and eliminating exposure to a listed investment where Redefine as a minority shareholder had limited input over funding or liquidity management. It also opens the door to exciting retail market opportunities in the Polish market as it accelerates its recovery from the Covid-19 pandemic."We have always been bullish on the Polish retail market and all indications are the Polish economy will grow in excess of 4% this year. Retail sales are on the rise and we are excited to now have a single entry point into this market via Redefine," he says."I am glad that our investors supported EPP delisting and restructuring proposals with a large majority. It was not an easy decision to make. I believe that once the company's reorganisation is completed, EPP will be in a position to return to the growth path, as well as to regularly deliver dividends to its shareholders," said Tomasz Trzósło, CEO of EPP. I also would like to thank the EPP team who put a lot of work into completing this project within a very tight deadline.Konig says the deal protects Redefine’s carrying value in EPP from dilutive value destruction and fits perfectly with moves to a more sustainable funding model in which debt is matched to stable assets, rather than underlying listed shares, that are subject to the vagaries of financial markets.With EPP unable to pay dividends for the past two years and facing significant loan maturities in 2022 and 2023, the deal’s core objective is to significantly reduce EPP’s debt through a liquidity generating restructure, which will restore it to a dividend paying position.EPP has a loan to value (LTV) of approximately 56% and Konig says it was therefore important to solve the liquidity challenge it was facing, without in any way impacting Redefine’s own LTV ratio."Redefine wanted to avoid these liquidity challenges to impact negatively on our own LTV of 41.6%, which we have worked hard to achieve," explains Konig. As a consequence of the restructure, EPP’s LTV reduces to well below 35% and as a consequence there is a marginal effect on Redefine."A lower LTV for EPP bodes very well for its ability to access liquid and well-priced Eurobond markets and open up new sources of funding. This gives us a lot of financial flexibility offshore," explains Konig.Redefine’s credit metrics also improve, with its interest cover ratio moving from 2.5 times to beyond 3 times.Konig explains that as the controlling shareholder of EPP, Redefine will be in a stronger position to drive initiatives to return EPP to a dividend paying position in the short term, thereby delivering improved distributions to Redefine shareholders."Redefine’s shareholders will obtain additional exposure to prime Polish retail assets directly held through EPP and there will no longer be two listed entry points to EPP, providing Redefine with a differentiated investment proposition on the JSE and potentially enhanced liquidity. This is a win-win and I believe this is why the results of the shareholder votes were so overwhelming," he concludes
Redefine Properties today announced that it proposes to make a share-for-share offer to acquire all the remaining shares in EPP it does not already own (excluding the shares held by IGroup). By implementing the delisting and acquiring control of EPP, Redefine will be able to procure the implementation by EPP of a reorganisation which is aimed at bolstering EPP’s balance sheet and significantly reduce the extent of its gearing to restore EPP to a dividend paying position. The EPP Board has expressed its intention (subject to EPP’s independent expert financial advisor confirming its preliminary opinion that Redefine’s offer is fair) to recommend that the proposed delisting and Redefine offer as being in the best interests of EPP and its shareholders and that EPP shareholders approve of all required resolutions to effect the proposed transaction. If approved, the transaction will see EPP delist from the JSE and Luxembourg Stock Exchanges and operate as a subsidiary of Redefine Properties. “The reorganisation will resolve EPP’s liquidity issues and eliminate the potential need for EPP to undertake an equity capital raise, which given the current economic climate be value destructive to existing EPP shareholders. Redefine will also become the sole listed point of entry into EPP, differentiating Redefine’s investment proposition, thereby potentially improving the liquidity of Redefine shares,” adds König. Redefine holds 45.4% of EPP with a R6.5 billion carrying value. The proposal places Redefine in a good position to benefit as retail demand improves in Poland. It will also drive diversification, with the Polish-centred offshore component of its overall portfolio likely to increase to 30%. EPP’s high level of gearing (c.55.6%) and liquidity challenges including significant loan maturities in 2022 and 2023 has meant that EPP has not been able to pay dividends since mid-2019. Besides impacting Redefine’s distributable income, the loss of dividend income from EPP has also impacted negatively on Redefine’s interest cover ratio and corresponding loan covenant headroom. “The EPP transaction is a compelling opportunity for us to stabilise and simplify our international investment in a portfolio of assets we know well and which are well-located in key metropolitan areas of Poland,” says Andrew König, CEO, Redefine. “Given challenging market conditions some on the back of ever evolving Covid-19 situation, EPP has not been able to deliver on its asset disposal strategy required to bolster its balance sheet and to manage liquidity requirements. The transaction will strengthen EPP’s balance sheet and gives us the mandate to pursue opportunities throughout EPP’s portfolio.” Without intervention, the prospect of EPP resuming regular dividend payments in the short to medium term are slim. This creates high potential for a longer-term dividend drought which has a material adverse impact on Redefine and is not aligned to Redefine’s REIT ‘income fund’ investment proposition. According to Redefine, the acquisition of a controlling stake in EPP furthers its strategy to simplify its investment proposition and actively manage risks and opportunities by exiting minority investments or gaining strategic control of assets where it already has a major stake. The Redefine offer will be made to all other EPP shareholders at a swap ratio of 2.70 Redefine shares for each EPP share held. Should shareholders of EPP approve the transaction, Redefine will (assuming 100% acceptance of the Redefine offer) issue up to 1 135 037 043 new Redefine shares. Redefine shareholders will also need to approve a shareholder resolution giving authority to Redefine to issue these new shares. The deal is subject to satisfaction of various conditions precedent, including the execution of transaction agreements and those agreements becoming unconditional, securing all required regulatory approvals and the approval of by a majority of EPP shareholders (other than Redefine and I Group), of the EPP delisting.
Redefine Properties (JSE: RDF) shareholders were rewarded for their patience when the company declared a dividend of 60.12 cents for the year ended 31 August 2021. This comes after Redefine’s board had resolved not to pay a dividend in 2020 in the face of ongoing COVID-19 uncertainty on liquidity.CEO Andrew König thanked shareholders for staying the course through a tough period, and is upbeat about the future. “We are living in an age of intersecting crises, but our careful management of reducing balance sheet risk and focused strategy to diversify and improve the quality of our asset platform places us in a strong position to deliver sustained value,” he says.The dividend will reduce the taxable income of the company to a nominal amount which avoids further shareholder value leakage. Meanwhile, distributable income per share for the year amounted to 52.96 cents from 51.50 cents the year before.Redefine and its shareholders are reaping the rewards of a sustained focus on de-risking the balance sheet and bolstering liquidity, with R5.8bn in cash and committed access facilities now on hand, compared to just R2.8bn in the last reporting period.In a major development, König says that Redefine has submitted a non-binding proposal to EPP which, if approved will constitute EPP as an unlisted subsidiary of Redefine. In terms of the proposal, Redefine will make an offer to EPP shareholders to swap their EPP shares for Redefine shares at an independently verified fair swap ratio. Redefine holds 45.4% of EPP with a R6.5 billion carrying value, and this proposal will place Redefine in a good position to benefit as retail demand increases further in Poland. It will also drive diversification, with the Polish-centred offshore component of its overall portfolio likely to increase to 30%. “What we are noticing is that e-commerce and logistics chains continue to grow in the post-pandemic environment. It is particularly pleasing that all our key indicators are positive,” says König.Redefine CFO, Ntobeko Nyawo, reports improvement across all key indicators. Loan to value (LTV) reduced a full 6.3% to 41.6%, net asset value per share improved to 733.24c from 714.85c, active portfolio occupancy increased to 92.9% versus 92.7% and cash on hand and committed access facilities was R5.8 billion (from just R2.8 billion).“We realised R5bn from disposals, which plays into the reduction of LTV, but in addition we have transactions at an advanced stage of a further R6.2 billion,” he says.Redefine is firmly focused on executing its strategic priorities further in 2022, introducing a climate resilience framework, striving for more sustainability interventions across its operating environment and investing strategically. Significant progress has been made in de-risking and simplifying the asset platform to ensure sustained value creation for all stakeholders.Nyawo says while the prior year’s revenue was impacted by local lockdowns and the deconsolidation of ELI, the current year was also impacted by the sale of Leicester Street and non-core local properties which led to a decline of 5% in revenue.Chief operating officer, Leon Kok says collaboration and a focus on the variables under Redefine’s control have been emphasised, leading to pleasing results.
JSE listed diversified real estate investment trust Redefine Properties is pleased to announce the appointment of Ms Anda Matwa as company secretary with effect from 01 December 2021. She joins Redefine from industry peer Attacq where she was the company secretary. Ms Matwa has extensive experience in corporate governance and regulatory affairs within the Johannesburg Stock Exchange listings environment and international experience across the Americas, Europe, Australia, Asia-Pacific and the continent. She holds a BCom Philosophy, Politics & Economics degree from the University of Cape Town, a MSc in Management and Corporate Governance from University of Ulster as well as a post- graduate Diploma in Corporate Law and a Higher Diploma in Tax, both from University of Johannesburg. She is currently pursuing a Bachelor of Laws (LLB) degree from the University of South Africa. Sipho Pityana, chairperson, says, “The appointment of Ms Matwa allows us to continue pursuing our strategic plan, reinforces our commitment to good corporate governance whilst building a competitive edge by attracting top-level professionals to Redefine.”“On behalf of the board of directors, I would like to welcome Ms Matwa and I believe that she will be a tremendous asset to Redefine Properties and a great addition to our executive team. I would also like to take this opportunity to thank Ms Thembekile Dube who held the reins in an acting capacity.”
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.”