Redefine Properties today announced its proposal to acquire up to an additional 250 million participatory units in Fountainhead Property Trust. In doing so, Redefine, which is already the largest single Fountainhead participatory unitholder, intends to grow its Fountainhead holding. Redefine is pleased to announce that, for a third consecutive year, we have been included in the JSE Socially Responsible Investment (SRI) Index. SRI Index inclusion requirements relate to environmental, social and governance (ESG) practices and policies, as well as climate change. To compile the 2014 index, the JSE assessed all 156 members of the FTSE/JSE All Share Index, with 82 companies meeting the inclusion requirements. It also only considered publicly available information, which means transparent reporting and communication played an important role in Redefine being included. The SRI Index is an aspiration sustainability benchmark that recognises listed companies that incorporate sustainability principles in their everyday business practices. For investors, the SRI Index can help those aiming to pick companies with a longer term horizon that are managing their risks responsibly. The assessment revealed that Redefine has a low environmental impact, resulting in environmental best practice. Redefine met all the core indicators for governance and sustainability concerns, achieved the requirements for social issues and was considered at entry level for carbon disclosure. Andrew Konig, CEO of Redefine Properties, comments: "We are pleased at our ongoing inclusion in this important benchmark which, like Redefine, puts sustainability at its core. Sustainability is imbedded into our business strategic objectives and we will continue to work towards improving key performance indicators in all areas of the business. "We are also delighted by the strong shareholder support received on the distribution reinvestment plan resulting in nearly R1 billion conserved." Redefine raised R987.9 million in equity through our distribution reinvestment plan, with shareholders holding 71% of qualifying shares electing to re-invest their distribution in Redefine. As a result, Redefine will allocate 103 991 300 new shares at a reinvestment price of R9.50 per share. Konig adds, "The active shareholder participation in the reinvestment alternative is underpinned by investor confidence and a healthy appetite for further investment in Redefine."
Redefine Properties today announced the acquisition of the Leaf Capital portfolio of properties for R4.1 billion equating to an initial income yield of 8%, substantially enhancing Redefine's office portfolio in the Western Cape. Marc Wainer, Executive Chairman of Redefine Properties comments: "Acquiring this trophy portfolio is a strategic triumph for Redefine. It is underpinned by high-quality income streams from its large, excellently located, premium grade office precinct assets. "The transaction includes a number of significant properties such as Black River Park and the Wembly Square Development.These assets change the face of our Western Cape portfolio, which will now include the top five percent of quality office blocks in Cape Town." In Gauteng, the acquired assets include Bryanston properties Silver Stream Business Park, Silver Point Office Park, Crawford House and Hampton Park. It also comprises Clearwater Office Park in Stubens Valley and Centurion Gate in Centurion. Leaf Capital is an unlisted company with nine substantial property assets in Gauteng and the Western Cape. The properties are well-located in major metropoles and benefit from strong lease covenants and quality tenants, such as Amazon, Medscheme, Kumba Iron Ore, Dimension Data, and the Green Building Council of SA. The portfolio is underpinned by strong lease covenants with 37% of the portfolio expiring in more than five years. The fund has maintained a tenant retention ratio of 82% (94% excluding buildings eaermarked for refurbishment) as well as delivering growth in lease renewals of 1.51% at a weighted average escalation rate of 8.1%. In addition, the portfolio offers future additional development potential as it includes developable bulk at Black River Park, The Boulevard, Silver Stream Business Park and Centurion Gate. Redefine will pay the purchase consideration through assumed third party debt of approximately R1.9 billion, 80% of the balance will be settled through a placement of shares and 20% funded from existing cash resources. While subject to Competition Commission approval and other conditions, the deal is expected to take commercial effect from 1 March 2015.Wainer notes: "This strategic transaction advances our strategy to grow a quality, diversified portfolio of properties that support sustainable and growing performance for our investors."
Hot on the heels of the Leaf portfolio acquisition, Redefine today announced it has acquired a portfolio of 56 retail properties in Germany in an equal joint venture with Redefine International. This portfolio is valued approximately ?157m million and reflects an initial net yield of 7.5%. The portfolio will initially be acquired with the existing bank debt of ?100m which the joint venture intends to refinance immediately after the transaction closes. After the financing the portfolio will produce a yield on equity in excess of 11%. Marc Wainer, Redefine Executive Chairman, comments: "This transaction is consistent with Redefine's stated intention of acquiring offshore properties directly and in partnership with established players. It is our first direct investment in Europe, and by partnering with Redefine International, we also benefit from its experienced European asset management team. "We sourced the portfolio and invited Redefine International to participate. All of the management and asset management will be undertaken by Redefine International for a fee of 0,375% of Redefine's share of the portfolio's gross asset value." The properties span some 128,000sqm of lettable area and comprise a mix of stand-alone supermarkets, food-store-anchored retail parks and cash-and-carry stores. The properties are well located within their respective markets, 85% in Western Germany and Berlin, with the remainder in East Germany. The portfolio is 99.2% occupied and benefits from strong tenant covenants with 90% of its gross rental income accounted for by Edeka, Netto, Rossmann and Real who are amongst Germany's largest retailers, exposing Redefine to high quality, secure, indexed-linked cash flows. The net equity consideration of approximately ?58m will be funded equally by Redefine and Redefine International from existing cash resources. The joint venture will initially assume the existing bank debt facilities of ?100m which have a weighted interest cost of 4.4% per annum, but the joint venture will refinance the existing facilities at current market rates on closing. The refinancing will be approximately 50% loan to value with an all-in cost of debt of 1.8%. "We are extremely excited about this acquisition. Our investment in Northpoint Australia is performing exceptionally well and we have no doubt that this acquisition will be equally successful," concluded Wainer. Redefine is one of SA's largest REITs with and property income earning asset base valued over R50 billion. In addition to its first direct European acquisition, Redefine has a 30.1% direct interest in Redefine International PLC and a R3.9 billion presence in the Australian property market, with 50% interest in North Sydney's landmark tower, Northpoint, and a 15.9% holding in ASX-listed Cromwell Property Group, as well as a 10% indirect equity interest through Redefine International.
Redefine Properties today reported distribution growth of 7.1% to 39 cents per share for the half-year to 28 February 2015, delivering on its market guidance. Andrew Konig, CEO of Redefine comments: "Redefine's solid performance and growth in distributable income for the half year of 31. 4% reflects our enhancing acquisitions and successful strategies. "Our diversified asset base and stated strategies will enable us to achieve our long-term goals. We are confident that we will deliver distribution growth of between 7% and 7.5% for the full 2015 year." Redefine's strategic growth, geographic diversification, tight asset management, efficient cost control and effective tenant retention strategies all contributed positively to the results despite ongoing challenging property fundamentals, with the operating environments across all property sectors remaining subject to uncertainty around electricity supply and local service delivery. JSE - listed Redefine is an internally managed diversified REIT that controls a property i ncome - earning asset base of R55. 6 billion, which increased by some R5 billion du ring the half year. Its market capitalisation appreciated a considerable 2 3 .6 % during th e six - month period to R4 5 billion, of which 22. 9% now represents international ownership, with notable investor inflows from Europe. Konig notes the increase in international investment in Redefine has come when domestic interest rates look like they could increase again. "This helps us fund future investments at a lower average cost." Redefine's property portfolio income for the period was 95 . 2% of its total revenue, while inco me from listed securities was 4. 3%, and tr ading and fee income totalled 0. 5%. Its local investment assets comprise an actively managed diversified, directly - held p roperty portfolio valued at R35. 9 billion. Fountainhe ad Property Trust, in which Redefine has a 65 . 9% equity interest, has a R11. 9 billion property portfolio, comprising predominantly of retail assets. Redefine now holds 11. 5% of Emira . Redefine has a 30. 1% equity interest of R3. 6 billio n in Redefine International PLC (RI PLC) , which is listed on both the LSE and the JSE. In add ition, Redefine has a direct 50% interest in Australia's North Sydney landmark tower, Northpoint, as well as holding 15 . 9% of ASX - listed Cromwell Property Group totalling R4.1 billion . Redefine has a further 10% indirect equity interest in Cromwell through RI PLC. "Our domestic priorities include dealing with the electricity crisis by providing uninterrupted power supply at our key properties, as well as energy - efficiency initiatives and sustainable building technologies," reports Konig . "We're also focused on upholding our profit margins, given rising utilities and rates and taxes. Letting of vacant space and managing tenant credit risk is another key focus area, given the muted state of the economy. We will also help further sustainable, long - term economic and social development, by establishing the Redefine Empowerment Trust. " Redefine aims to continue diversifying, growing and improving the quality of its portfolio. It made excellent progress during the half - year with a programme of strategic acquisitions including 31 direct properties acquired for a total R3 billion at an initial yield of 8. 5%, and the Leaf portfolio for a collective R4 . 7 billion at an initial yield of 7 . 8%. Redefine is making progress in the acquisition of all the Fountainhead assets - a process which it aims complete and implement before the financial year end. Konig says Redefine will continue to seek out prospects for its international investment, " although it is difficult to source opportunities given the weight of money chasing prop erty internationally right now." He adds Redefine is also exploring new subsectors to support investor value. This includes de - risked projects in student and possibly residential accommodation, geared to test market demand and strategic suitability. " The headwind of upward interest rate pressure will pose a challenge for the listed property sector, but we believe it will also create opportunities in the rest of the year. We will continue to identify and pursue enhancing opportunities which furthers Redefine's strategy to become South Africa's best REIT and deliver sustained value to our shareholders." says Konig
Redefine Properties have set a new benchmark for commercial property development with a series of building innovations that is transforming the architectural face of Johannesburg. This was highlighted at the recent SAPOA Innovative Excellence in Property Development Awards which saw a flagship commercial building project for Redefine, 90 Grayston, winning the esteemed award for Commercial Office Development. "The property world is changing rapidly and we are proud to be at the forefront of this new era," says Mike Ruttell, Executive Director: Development at Redefine Properties. "It's all about forward thinking architecture backed with extremely powerful green building technology. We knew we were making a statement with 90 Grayston, and winning this award shows us that we are being heard." The Innovative Excellence Award, known as "the Oscars of the property industry" recognise the country's top buildings in terms of innovation, aesthetic appeal, sustainability, creativity, as well as game-changing architectural concepts, as judged by a panel of the industry's top consultants. "The power of this building is really in its architecture, together with the highly attractive and efficient space it offers to tenants. There is really nothing else like it in Johannesburg, which makes it the perfect flagship for our new development drive," says Ruttell. 90 Grayston is a 16-storey premium-grade office building of 19,343m2 in Sandown, central Sandton. It includes 11 levels of parking - five basement and six above ground, achieving a parking ratio of nearly five bays per 100m2. There are nine levels of offices above an elevated atrium, and the building will also have its own cafeteria. 90 Grayston is 4-Star Green Star SA Office rated building, certified by the Green Building Council South Africa. This intelligent building respects the environment with a combination of passive design principles and world-class green technologies to minimise the impact of the building and its ongoing use on the environment. These include the use of a High-efficiency ammonia chiller HVAC system and the harvesting of rainwater to flush toilets.
Shareholders of Redefine Properties, one of the country's largest listed property companies, have approved the establishment of an Empowerment Trust - a move that will materially bolster its BBBEE credentials. Shares to be issued to the Trust will hold an equity value of approximately R3 billion. At a general shareholders meeting held in Johannesburg today, Redefine shareholders voted in favour of issuing up to 300 million shares to the newly established Trust, funded by a loan advanced by the company. "We are delighted with the outcome of today's vote. The overwhelming support of our shareholders to create this Trust reaffirms our group's commitment to sustainable empowerment," says Andrew Konig, Redefine CEO. "This is an important milestone for the company and a significant step towards achieving our BBBEE objectives." "Our approach to transformation is to create sustainable, robust, credible and broad-based benefit and value, and we believe that this transaction will generate long term value for all stakeholders." The Trust, which is structured as a capital preserving Trust will continue in perpetuity and its principle focus is on activities to improve education and training at all levels; through the provision of scholarships and bursaries and community development programmes. Beneficiaries include pre-school children, school children, students at tertiary institutions, black entrepreneurs, community upliftment programmes and poverty alleviation organisations. "We have been very clear about the tangible social impacts we want to make with this Trust. We believe that by empowering South Africans at all levels through education, we can go a long way towards overcoming the barriers to transformation and at the same time, create the kind of skills that the country really needs. Beneficiaries have therefore been carefully categorised according to four classes to ensure the appropriate allocation of funds," said Konig. The Trust will operate independently and will be managed by external independent Trustees. All beneficiaries must be black South Africans, of whom at least 50% should be female, according to the scheme's terms. The transaction was developed and structured in accordance with the DTI's Code of Good Practice and the Property Sector Charter Codes.
Redefine Properties, SA's second-largest real estate investment trust, has secured its takeover of Fountainhead Property Trust's property portfolio. The deal received overwhelming approval by Fountainhead unitholders eligible to vote (Redefine as a related party to the transaction was precluded from voting its shares) at a general meeting held in Rosebank this morning.Redefine, which owns Fountainhead's management company and holds a 66% equity interest in Fountainhead, will acquire all of Fountainhead's assets including the entire Fountainhead property portfolio in exchange for 85 new Redefine shares for every 100 Fountainhead units plus the assumption of Fountainhead's liabilities. Based on Redefine's current share price, the transaction places a value of just under R14 billion, on Fountainhead's property portfolio, comprising 44 properties, of which 70% by value are prime retail assets."We are thrilled with the outcome of today's meeting which for us completes a process we began more than three years ago," said Redefine CEO Andrew Konig. "The acquisition of this portfolio positions us to manage our balance sheet and domestic asset allocation more efficiently to provide our shareholders with the added benefit of increased direct exposure to retail real estate assets." For Fountainhead investors, the transaction will provide exposure to a diverse portfolio of local and international property assets valued at approximately R60 billion, access to a broader funding base and the benefits of economies of scale and cost savings thanks to synergies between both property portfolios.For Redefine shareholders, the transaction means portfolio growth, quality improvement, structural simplification and diversification through the added benefit of increased exposure to retail property."We are greatly encouraged by the shareholder support we received from Redefine and Fountainheads' shareholders and are excited to be implementing this acquisition, which to a large extent, completes Redefine's property portfolio restructure which began towards the end of 2011" concludes Konig.
For the second time this year, Redefine has been recognised for the quality of its integrated reporting when the company received the Nkonki Top 100 JSE Integrated Reporting Awards for its 2014 Integrated Annual Report. Redefine was ranked joint sixth overall out of the Top 100 JSE listed entities at a function held last week and also received an Excellence Award for achieving an A-rating (above 80%) for its Integrated Annual Report. The Nkonki awards recognise those JSE listed companies who are committed to adopting the internationally recognised Integrated Reporting Framework devised by the International Integrated Reporting Council. In August 2015, Redefine was also ranked sixth in the top ten positions in the EY's Excellence in Integrated Reporting Awards 2015, improving on its 2014 merit award for the most improved integrated annual report. Commenting on the award, Redefine Financial Director Leon Kok says, "This award is yet another achievement in a watershed year for us, which includes being listed in the JSE Top 40 for the first time. To receive two awards for excellence in integrated reporting is testimony to our commitment to transparent stakeholder communication in all of our reporting. "Our integrated annual report represents an opportunity for us to share our story of value creation and business strategy as well as our plans to align environmental and social challenges and opportunities with our stakeholders. We are therefore extremely pleased to receive recognition that our integrated reporting journey is on the right track and encourages us to strive for further improvement."
Redefine Properties' full-year results released today reflect the company's strong growth trajectory for the year ended 31 August 2015, backed by a solid financial performance and underpinned by a dynamic, future-focused strategy. The company declared a final distribution of 41 cents per share, taking its full year distribution to 80 cents for the year ended 31 August 2015, translating into a 7.3% increase on the previous year. Commenting on the results, CEO Andrew Konig says, "This has been a year of high activity in which we significantly expanded on the scope and quality of our investments. Our objective has been to create a robust platform from which we can achieve and sustain long term growth. Our investment profile has also been raised considerably by our inclusion in the JSE Top 40 index, in this, our 15th year as a listed company." In another first for the company, its distributable income has risen by R875 million to exceed R3 billion, an increase of 36%. Group total assets also increased by 22% to R70 billion, predominantly funded through expansion of the capital base, which resulted in improved credit metrics. The portfolio of global property assets currently managed by Redefine - and spread across South Africa, Europe and Australia - is valued at R64.5 billion. Redefine's international operations, which provide geographic diversification, accounted for 17% of distributable income, and are anticipated to grow between 20% and 25% over time. The company's domestic property portfolio has also improved in quality and scale through a process of acquisitions and development activity. Of the several property transactions concluded during the year under review, one of the most sizeable acquisitions has been the deal with Leaf Property Fund to acquire its 14 high-quality commercial property assets valued at R4.1 billion. Redefine's directly held property portfolio also received a boost from the merger with Fountainhead Property Trust, which was settled by Redefine issuing R3.8 billion in shares to the Fountainhead minorities. In the process, Redefine has gained direct control of a predominantly retail portfolio of 44 properties. "The Fountainhead merger translates into more efficient management of the portfolio and largely completes the restructuring that began in 2011. The Leaf acquisition on the other hand increased our representation in the office market, particularly our footprint in the Western Cape where we now have several Green Star-rated properties," says Konig. The Leaf deal boosts Redefine's human capital, and brings valuable skills in retrofitting buildings to improve energy efficiency, an important sustainability focus for the company. Over and above the Leaf and Fountainhead portfolios, the company also acquired and transferred ownership of 34 properties, for the aggregate sum of R3.9 billion. Redefine's international expansion involved a further investment of R1.6 billion in Cromwell, taking a direct 50% holding in a German property portfolio with an equity contribution of R700 million and maintained its 30% holding in Redefine International by participating in various equity activities totaling R500 million. New developments in South Africa with an approved value of R3 billion are currently in progress, while refurbishment of existing properties in the portfolio, valued at R800 million, are also underway. Projects worth R1.4 billion were completed during the course of the past financial year. A strong focus for the company is environmental sustainability. Redefine is in the process of installing smart metering for water and electricity across their portfolio, the positive impact of which will be improved billing and consumption management. Explaining Redefine's sustainability focus Konig says, "Income yields can be increased by more than 10% with the use of solar. We are looking at alternative sources of energy and especially so as there has been an improvement in the efficiency and cost of photo-voltaic panels. However, not all existing roof structures have been designed to carry the weight of these panels, so we also need to consider feasibility." Redefine is aiming for at least a four-star Green Star rating across all its new developments, which includes their 90 Rivonia Road and 90 Grayston Road properties. "Property is embedded in the economy and in the community, and sustainability forms a core component of our long-term strategy to provide world-class, efficient and sustainable spaces. Our asset management strategy is geared to protecting and entrenching our assets." says Konig. The company is expecting to deliver six to seven percent distribution growth on a per share basis for the forthcoming year.
Johannesburg, South Africa – 05 September 2016: Redefine Properties Limited (“Redefine” or the “Issuer”) announces the launch of an offering of senior, secured exchangeable bonds due 2021 (the “Bonds”) with a principal amount of EUR150 million, exchangeable into ordinary shares (the “Shares”) of Redefine International P.L.C. (the “Company”). The Bonds will be marketed with a coupon range of 1.25 – 1.75%, payable semi-annually in arrear. The initial exchange price of the Bonds is expected to be set within a premium range of 22.5 – 30.0% to a reference price (the “Reference Price”) determined as the euro-equivalent of the arithmetic average of the daily volume weighted average prices of a Share listed on the London Stock Exchange plc (the “LSE”) on each of the five scheduled trading days commencing on (and including) the date hereof, such Reference Price being subject to a floor of EUR 0.45673 and a cap of EUR 0.51902. The Bonds will be issued at 100% of their principal amount and, unless previously exchanged, redeemed, or repurchased and cancelled, will be redeemed at par (subject to the Issuer’s settlement option referred to below) on 16 September 2021. Holders of the Bonds will have the option to require an early redemption of their Bonds on the third anniversary of the issue date, at their principal amount, together with accrued interest. Upon exchange the Issuer will have the flexibility to settle in cash, deliver the underlying Shares or any combination thereof. The Issuer will have the option to redeem any outstanding Bonds at their principal amount together with accrued interest under certain customary conditions, as further described in the terms and conditions of the Bonds (the “Terms and Conditions”). The Issuer will also, at maturity or upon early redemption, have the option to deliver a combination of Exchange Property, in whole or in part, and cash, subject to customary conditions described in the Terms and Conditions.The Issuer's obligations in respect of the Bonds will be secured under English law by, inter alia, a first fixed charge over the pledged property (which shall initially include such number of underlying Shares as is determined at final pricing (the “Exchange Property”)) and the Stock Lending Agreements entered into by the Chargors (each as defined below), pursuant to the security agreements between Redefine Retail (Pty) Ltd, Madison Property Fund Managers Holdings Limited, Madison Property Fund Managers Limited and Redefine Global (Pty) Ltd (the “Chargors”) and the Trustee. Any adjustment to the Exchange Property, including in respect of cash dividends, shall trigger a corresponding adjustment to the pledged property. The Bonds are expected to be rated by Moody’s. The Bonds will be rated after the Settlement Date.In the context of the transaction, the Issuer and its subsidiaries will be subject to a lock-up undertaking in relation to the Shares for a period ending 90 days after the Settlement Date (as defined below), subject to customary exceptions. Certain final terms of the Bonds are expected to be determined and announced today and settlement is expected on or around 16 September 2016 (the “Settlement Date”). Application will be made to admit the Bonds to trading on the Open Market (Freiverkehr) of the Frankfurt Stock Exchange by no later than 90 days following the Settlement Date. The Issuer will use the proceeds of the issuance of the Bonds to refinance debt, provided by the Sole Bookrunner and associated entities, incurred in the acquisition of a majority interest in Echo Prime Properties B.V. J.P. Morgan Securities plc is acting as Sole Bookrunner on this transaction. J.P. Morgan Securities plc, the Issuer and the Chargors will enter into stock lending agreements (the “Stock Lending Agreements”) on or around the date hereof in respect of Shares representing approximately 10 per cent. of the Company’s issued share capital for the purposes of facilitating investors’ hedging activities. For more information, please contact:Redefine Properties Limited:Redefine Place3rd Floor2 Arnold RoadRosebankGautengSouth Africa2196 Telephone: +27 11 283 0032Attention: Leon Kok 5th September 2016 Company sponsor: Java Capital NO ACTION HAS BEEN TAKEN BY THE ISSUER, THE COMPANY, THE SOLE BOOKRUNNER OR ANY OF THEIR RESPECTIVE AFFILIATES THAT WOULD PERMIT AN OFFERING OF THE BONDS OR POSSESSION OR DISTRIBUTION OF THIS PRESS RELEASE OR ANY OFFERING OR PUBLICITY MATERIAL RELATING TO THE BONDS IN ANY JURISDICTION WHERE ACTION FOR THAT PURPOSE IS REQUIRED. PERSONS INTO WHOSE POSSESSION THIS PRESS RELEASE COMES ARE REQUIRED BY THE ISSUER, THE COMPANY AND THE SOLE BOOKRUNNER TO INFORM THEMSELVES ABOUT, AND TO OBSERVE, ANY SUCH RESTRICTIONS. THIS PRESS RELEASE IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT). THIS PRESS RELEASE IS NOT AN OFFER TO SELL SECURITIES OR THE SOLICITATION OF ANY OFFER TO BUY SECURITIES, NOR SHALL THERE BE ANY OFFER OF SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SALE WOULD BE UNLAWFUL. THE BONDS MAY BE DEEMED TO BE THE SECURITIES OF A “COVERED FUND” FOR THE PURPOSES OF THE VOLCKER RULE.THE ISSUER IS NOT REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940 AND INVESTORS WILL NOT HAVE THE BENEFIT OF THAT ACT. THIS PRESS RELEASE AND THE OFFERING WHEN MADE ARE ONLY ADDRESSED TO, ANDDIRECTED IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA (THE “EEA”) AT PERSONS WHO ARE “QUALIFIED INVESTORS” WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE PROSPECTUS DIRECTIVE (“QUALIFIED INVESTORS”). FOR THESE PURPOSES, THE EXPRESSION "PROSPECTUS DIRECTIVE" MEANS DIRECTIVE 2003/71/EC, AS AMENDED. IN ADDITION, IN THE UNITED KINGDOM THIS PRESS RELEASE IS BEING DISTRIBUTED ONLY TO, AND IS DIRECTED ONLY AT, QUALIFIED INVESTORS (I) WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(5) OF; THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE“ORDER”) AND QUALIFIED INVESTORS FALLING WITHIN ARTICLE 49(2)(A) TO (D) OF THE ORDER, AND (II) TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “RELEVANT PERSONS”). THIS PRESS RELEASE MUST NOT BE ACTED ON OR RELIED ON (I) IN THE UNITED KINGDOM, BY PERSONS WHO ARE NOT RELEVANT PERSONS, AND (II) IN ANY MEMBER STATE OF THE EEA OTHER THAN THE UNITED KINGDOM, BY PERSONS WHO ARE NOT QUALIFIED INVESTORS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS PRESS RELEASE RELATES IS AVAILABLE ONLY TO (A) RELEVANT PERSONS IN THE UNITED KINGDOM AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS IN THE UNITED KINGDOM AND (B) QUALIFIED INVESTORS IN MEMBER STATES OF THE EEA (OTHER THAN THE UNITED KINGDOM). THIS DOCUMENT IS NOT AN OFFER TO SELL SECURITIES OR THE SOLICITATION OF ANY OFFER TO SUBSCRIBE FOR OR BUY SECURITIES, AND NO SECURITIES WILL BE SOLD, WITHIN SOUTH AFRICA OR TO OR BY ANY PERSON RESIDENT IN OR WITHIN SOUTH AFRICA. ANY DECISION TO PURCHASE ANY OF THE BONDS SHOULD ONLY BE MADE ON THE BASIS OF AN INDEPENDENT REVIEW BY A PROSPECTIVE INVESTOR OF THE ISSUER’S AND THECOMPANY’S PUBLICLY AVAILABLE INFORMATION. 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Johannesburg, South Africa — JSE-listed diversified real estate investment trust Redefine Properties (JSE: RDF) has announced its intention to acquire the entire issued share capital of The Pivotal Fund (JSE: PIV). Pivotal, a development focused investment fund, has an A-grade portfolio of completed income producing properties and developments. Under the terms of the transaction, valued at R6 billion, shareholders in Pivotal will receive from Redefine 460 million new Redefine Properties shares plus 31 million shares in Echo Polska Properties (EPP), effectively placing Pivotal shareholders in the commercial position they would have been in had Pivotal unbundled its EPP shares to its shareholders. The Redefine shares will be issued ex-dividend, anticipated to be at the end of November 2016 and the EPP share will be delivered during January 2017. Redefine Properties’ strategic investment in EPP will remain intact. The deal, which is subject to the usual regulatory processes for a transaction of this nature, will be implemented through a scheme of arrangement which requires 75% approval at a general meeting of Pivotal shareholders. Redefine Properties will delist Pivotal once the deal has been concluded which is expected before the end of the year. Andrew Konig, CEO, Redefine Properties says, “An irrevocable buy-in from a significant number of Pivotal shareholders has been received. Our intention is not to be a shareholder as we can only achieve the full potential for synergies with complete ownership.” “Development funds like Pivotal are seeing twin challenges of increasing cost of capital as well as the macro environment putting pressure on development returns,” adds Konig. The acquisition of the Pivotal portfolio enables Redefine to continue with its investment philosophy to recycle its capital through disposing assets no longer aligned to its long term investment strategy and replacing them with prime (Pivotal) assets. ‘’We believe we bring compelling value to shareholders of both companies with Pivotal shareholders receiving a long-term upside potential of an investment in Redefine, increasingly recognised for its performance in a difficult and competitive market.” The deal will see Redefine Properties which already co-owns S&J Industrial Estate in Germiston and Rosebank Galleria with Pivotal, gain significant reach in Sandton and consolidate its position in Rosebank. “The acquisition demonstrates Redefine’s strategic intent to become the landlord of choice in A-grade office space in sought after areas in South Africa. Redefine has shifted its strategy in recent years to become a more urban focused landlord by acquiring modern properties in better performing nodes,” says Konig. Pivotal’s property portfolio is valued at R12.9 billion and its income producing assets comprise 8 retail properties, 10 offices and 3 industrial sites, a number of development properties with 4 active developments. Pivotal’s African assets in markets like Mauritius, Mozambique, Nigeria, Morocco, Kenya and Zambia will be sold post implementation. Once the deal has been finalised, Redefine will operate approximately 350 properties totalling nearly 5.7 million square metres across the country. According to Konig, the deal provides Redefine with “a unique opportunity” in the current environment to acquire a portfolio of well leased modern properties in a single transaction. The acquisition further cements our position as one of the top landlords in Sandton, a node where we have grown to almost 30% of our office portfolio from almost no exposure five years or so back and allows us to make meaningful expansion into Bryanston and Centurion. In Sandton, Redefine will add crown jewels like Alice Lane with tenants like Sanlam, Santam, Standard Bank, and Virgin Active South Africa. Part of the development at Alice Lane also includes an office building likely for completion during April 2017 to house legal heavy weight Bowman Gilfillan. Besides this acquisition, Redefine Properties significantly broadened its offshore footprint earlier in the year via a €260 million equity investment into EPP which has a €1.2 billion high-yielding commercial platform comprising 18 properties in the rapidly-expanding and exciting Polish market. To continue on its growth trajectory, EPP plans to broaden its shareholder base by listing on the JSE during the first half of September this year.
Redefine Properties' commitment to best practice stakeholder reporting was rewarded once again at the 2016 Ernst & Young's Excellence in Integrated Reporting Awards today when it was ranked 5th in the top 10 companies. Redefine Properties' report was singled out as an excellent example of how a property company can tell its value creation story. This is the second year in a row that Redefine Properties finds itself in the impressive list of firms heralded for their integrated reporting. Last year, Redefine was ranked 6th in the top 10 of the JSE's Top 100 companies. Leon Kok, Financial Director, Redefine Properties, says "We regard the integrated report as a formidable tool to communicate with our stakeholders." "The report is an outcome of our ongoing efforts to enhance communication with our stakeholders in a forthright manner that addresses prospects and challenges and remains for us, a benchmark for disclosure and accountability." "The integrated report offers our stakeholders a window into how we are creating value both inside and outside of the company. The key benefit to integrated reporting is the way it's deepened our sustainability focus and helped embed greater levels of integrated thinking throughout our organisation." According to the adjudicators, the report highlights and provides a comprehensive view of risks and is complemented by a number of risk heat maps that provides an understanding of the short to long term risks facing the company. The report also provides an excellent description of the companies' business model that includes primary business activities as well as the outcomes. "We are delighted to receive recognition that our integrated reporting journey is on the right track and it motivates us to continue improving our stakeholder communication," says Kok in conclusion.
Johannesburg – 1 August 2016 – The weaker economic outlook continues to add pressure on office rentals, but JSE-listed diversified real estate investment trust Redefine Properties (JSE: RDF) says a well located office block with the right offering “should let”. “It is unlikely the current economic conditions are going to change any time soon and this means the outlook for the office rental market remains gloomy. Secondary properties in particular remain under significant pressure to retain and gain tenants. But this should not mean there is no opportunity in this office space either,” says Redefine’s chief operating officer, David Rice. Redefine’s strategy three years ago to improve the profile of its office portfolio by acquiring modern properties in better nodes, redeveloping and upgrading existing properties places it in a stronger position today. “We are now far more invested in areas such as Sandton and Rosebank than previously, for example, and have sold off what we deemed to be secondary properties and will continue to do so,” says Rice. Today Redefine’s exposure to these suburbs is approximately R6 billion. Redefine’s new home, Rosebank Towers, a 25 000sqm office block, has been pre-let with rentals upwards of R200/sqm, reflecting the interest in the Rosebank node. As a result Redefine will shortly begin the demolition of Rosebank Mews and develop a premium grade, 4 star, green-rated office block of approximately 18 000sqm with an abundance of parking, access to the Gautrain, restaurants and retail outlets . In addition, Redefine is focusing, as a priority, on upgrading the quality of buildings in these and other popular nodes. “We expect rental growth in Rosebank to continue whereas most nodes are not experiencing real rental growth. “There is no doubt the landscape for office space is changing and we need to be able to deliver on these future needs. Facilities that allow an office worker to get on with their day-to-day lives with as little hassle as possible will continue to be in demand; as will the right geography and access to facilities,” says Rice. The need for better utilisation of space is increasing as the space per person in the working world shrinks. This is not just an SA phenomenon as major moves in this direction take place globally with many big companies reverting to open plan environments, without dedicated workspaces – even for their executives. Demand for serviced offices is a trend that needs to be taken seriously. In line with its continuous pursuit of quality, Redefine has therefore partnered with a flexible workspace solutions company to grow its exposure in this area of the market. This partnership sees Redefine developing approximately 5 000 square metres across seven sites where it plans to be able to offer flexible workplace solutions. “We hope this will be the first of many developments along these lines. Demand for serviced offices and flexible leases will also increase as more staff members work remotely,” says Rice. In addition the jury is out on future parking requirements in office blocks and whether the current requirement will be reduced in time. The need for greener space and for older properties to be retrograded via green star ratings will increase, as more companies are required to report on their broader impact on the environment. “Our aim is for all new offices to have at least a four star green rating and are already making progress on rating existing buildings and hope to be able to certify a number of them by the end of the next financial year,” says Rice. A good relationship with tenants, their representatives and brokers remains crucial as these and other trends unfold and those companies that fail to maintain these high levels of trust and delivery will struggle. A sharp focus on operational efficiency, diversity, core portfolio quality, the fine tuning of structures and strong relationships with key stakeholders will continue to drive growth and open the door to opportunities in the office space. “It need not all be doom and gloom – but future success will require a very clear strategy to be mapped out and delivered upon. The right product will still work and achieve good value despite the challenging economic environment,” concludes Rice.
Johannesburg, South Africa – JSE-listed diversified real estate investment trust Redefine Properties (JSE: RDF) has delivered a strong performance during the half year to end February 2016 despite the stiff headwinds facing South Africa’s economy and ongoing political uncertainty. A 6.9% increase to 41.7 cents a share in the distribution for the six months to end February 2016 has been declared. In rand terms distributable income rose 29.4% to R1.9bn. The company maintains its guidance of 6-7% distribution growth for the full 2016 year on the back of its well-diversified asset base and the continuing execution of its key strategic priorities. While economic uncertainty and financial market volatility is ongoing, a sharp focus continues on operational efficiency and managing relationships with key stakeholders, including local government. CEO Andrew Konig says these are “challenges we are up to”. Konig says in the period under review management focused on “how we can do things even better.” This was targeted at creating efficiencies and also resulted in a realigning of structures to cope with new demands and beefing up of the senior management structure as part of a broader asset and property management strategy. The bulk of Redefine’s local strategy is centred on existing properties and on servicing its significant development pipeline. Leases covering 282 070 sqm were renewed at an average rental increase of 4.3%, with the retention rate at a pleasing 83%. During the review period, the company completed projects totalling R1.8 billion representing investment of R700m, outgunning acquisitions for the period of about R400m. Disposals amounted to R1.2 billion, while new development projects with an approved value of R1.1 billion are currently in progress. “We have successfully recycled capital domestically to part-fund development as well as new acquisitions,” explains Konig. Net arrears improved to R34m from R42m at end 31 August 2015 and the company’s financial director Leon Kok says one of the core tenets of Redefine’s business model is its prudent management of cash. “Cash management is critically important and we have also put a greater emphasis on the quality of tenants at inception of leases,” says Kok. High debt funding costs are expected to constrain future development in the property sector locally, but a rerating of Redefine’s share price has offset the increase in the costs of debt. The major disposal during the six months related to Redefine’s R2.2 billion government tenanted office portfolio, it has been the company’s stated intention to dispose these of assets. During the period it entered into an agreement with Delta Property Fund which acquired approximately 60% of this portfolio valued at R1.3 billion, in return for Delta shares. Opportunities for select industrial development remains on the agenda – as an example, Redefine entered into a joint venture with Pivotal and Abland whereby Redefine acquired a 45% interest in S & J land earmarked for an industrial precinct to be serviced and developed in phases based on demand. S&J land comprises a 160 hectare (1.6 million sqm) prime industrial parcel of land located in Germiston, Johannesburg. On the retail front, a new development phase includes the Stoneridge Shopping Centre, a 51 917 sqm open-air lifestyle shopping centre located in Edenvale, Johannesburg. A core ongoing strategy is to exploit attractive offshore yield spreads, where debt can potentially be locked in for five years at exceptionally low rates. The company’s offshore portfolio is set to grow from 21% currently to 24% once the company’s ground-breaking Polish deal kicks in later this year. Redefine has broadened its offshore footprint via an initial 75% investment into a 1.2 billion euro high-yielding commercial platform comprising 18 properties in the rapidly-expanding and exciting Polish market. The initial stake will reduce to 49.9% as a result of a placement of shares with investors. Anti-trust clearance has been received for this deal and the company anticipates the acquisition to be fully implemented on June 1 and to add accretive income in the last quarter 2016 at an additional one cent of distribution per share. Apart from the Polish deal, the company is also in the process of establishing a limited investment presence in Spain and further diversification in student accommodation in Australia. “Local property fundamentals remain challenging, with issues like electricity price increases and the impact of drought conditions still permeating the industry. But we continue to deliver on our strategy of diversifying, growing and improving the quality of our core property portfolio, while ensuring that we focus on our people, the fine-tuning of our management structures and delivery to all our stakeholders,” concludes Konig.
Following our acquisition of Echo's developed property portfolio comprising 10 retail centres and eight office developments in major cities in Poland, one of the first things we did was invite the investment community on a road trip to the country to view the properties and get insight on the property fundamentals and growth potential in Poland. Over the past two decades the Polish economy has continued to gather momentum, growing steadily at over 3.5% on the back of the highest allocation of structural funds by the European Union. It's also seen interest and investment from the West, the East and now from South Africa. According to CBRE, retail business is one of the fastest growing sectors of the Polish economy and ranked as the 19th most attractive market globally for retail brands. Our recent acquisition gives us a good spread over Poland's retail geography and affords us over 457,400 sqm of total lettable area in major Polish cities. Our retail assets are let out to leading retailers with strong turnover growth and international brands like Samsung, H&M, IKEA, Carrefour, Zara amongst others. Office space is mainly leased to blue chip tenants. Adrian Jardine, Equity Analyst at Avior Capital Markets who has been cautiously watching South African REIT's foray into offshore markets returned impressed with Redefine's approach to the market. He says, "The acquisition is good and so is the scale. Equally impressive is the quality of the core portfolio and the in-country team." "I am really excited about the development pipeline which will unlock value for shareholders. I am equally charmed by the Polish economy's fairy tale like story," he concluded. Leon Allison, Fund Manager at Peregrine Capital, said for him the biggest positive was the country's macro environment which continues to be positive and headed in the right direction with good growth prospects in the medium to long term. "While any change in government introduces a level of uncertainty, the risks seem manageable." "Poland has the assets to drive growth including an educated workforce; affordable labour, strategic location and first world infrastructure." "Although I am not a fan of office assets as long term strategic play and would prefer they sell into the investment market, retail is good enough to work with," he added. Bandi Zondo, Equity Research Analyst (Real Estate) at Standard Bank says the acquisition of Echo's portfolio is one of the better deals Redefine has concluded in a long time. The key upside is the platform and development pipeline as well as the local team's skill and strength. "It is a huge opportunity for Redefine to unlock value in their portfolio both domestically and internationally," Zondo said. The local team made a lasting impression on Keillen Ndlovu, Head of listed property funds at Stanlib who said, "The trip was better than expected and from my meetings with them it is clear that they are very knowledgeable, run a sound business and are an operationally strong and diverse team." "We don't see this often but the team's forthrightness and disclosure during site visits, where we even got to see competitor projects is praiseworthy." "While concerns are part and parcels of deals this size, the portfolio of both existing and potential looks good and carries immense potential." "In my view, the appetite for retail property is likely to prevail from what I have seen. Also Business Process Outsourcing by multinationals continue to head towards Poland and that is another comforting factor." "I do foresee challenges in the office market with lots of supply coming through so securing best tenants with long term leases will be key. Poland has been strong in 2015 and based on the macro environment is expected to have a strong 2016 as well. Romania has been courting investors and getting attention, but Poland is probably going to continue to grow the fastest given its diverse market." Evan Jankelowitz, Fund Manager at Sesfikile Capital returned very satisfied with the competency and depth of the management team in Poland. "The assets - both property and people are first rate and the potential in both extensions and developments are significant." "While risks in property are inherent, on the face value this is a redefining deal," says Evan. The Poland tour visited the cities of Warsaw, Wroclaw, Krakow, Szczecin, Poznan and Kalisz.
If you haven't already heard about Katowice, Kielce or Kalisz, chances are the zloty hasn't dropped yet. In 2015, Poland's Business Process Outsourcing (BPO) and Shared Services Centres (SSC) employed over 150,000 people, the largest employer in the country after mining. A number of reasons work in tandem to favour the fortunes of Poland's emerging cities - economic stability, highly qualified pool of graduates and first world infrastructure. Many global corporations and ICT firms are increasingly setting up operations in Poland's regional cities for cost efficiencies and access to labour pools. Even the iconic Fiat 500 is manufactured in Katowice. So if you haven't been paying attention till now, it is time to polish up. The rapid proliferation of the business services industry in Poland is manna for the property sector. Forecasts by the Association of Business Service Leaders in Poland predict the sector will employ over 250,000 people by 2020. Accommodating the bulging sector and those who serve it presents a basket of opportunities for Redefine. As these cities continue to grow the number of jobs and attract blue chips corporations like Microsoft, Intel and Citigroup - the war on talent will simply drive more people to the regional cities in search of jobs. Retail benefits from lower unemployment figures as rising disposable income encourages social life and spending. While prime shopping centre rental fees remain highest in Warsaw, yields are increasing slightly in the agglomerations of Poznan, Krakow, and the Tri-City, while remaining stable in the other markets. The retail segment was the most active of all commercial real estate sectors: projects worth approximately Euro 2.261 billion changed hands last year, the highest result since the record-breaking 2006. Jones Lang LaSalle (JLL) reported last year that an increasing number of retailers were being more selective with regard to expansion in new locations with the quality of any new retail project high on the check-list. The inflow of foreign brands in 2015 was slightly lower than in 2014, with only 18 new international entries (as compared to 24 in the previous year). It is however prudent to note that this temporarily lower activity did not stem from any lack of attractiveness of the Polish retail market, but rather from the search for good franchise partners. The most anticipated fashion debut on the Polish retail market last year was that of Superdry (from the UK). We look forward to the next few years as the market anticipates debuts by other international brands like Forever21, Banana Republic & FCUK. Amazon recently moved the unglamorous industrial property sector centrestage when it opened fulfilment centres in Wroclaw and Poznan to service mostly the German market. Upgrading of transport links to the rest of Europe has given Poland the necessary license to market itself as Europe's mid-point and lure operators to build warehouses as well as business outsourcing centers. Poland's power play in warehousing, a lifeline to e-tailers, has meant that vacancy rates have been consistently declining. Big online retailers like Amazon vie for distribution space closer to population centers to make deliveries quickly. Our right of first offer on over Euro 500m projects, with more than 80% of newly constructed GLA provides additional growth and value upside backed by developer guarantees from Echo. It is also an honour to report that this acquisition has landed Griffin Real Estate, the Investor of the Year accolade at the 8th EuropaProperty CEE Retail Awards for its investment success in 2015. Griffin won for its role in Redefine's acquisition of a majority stake in Echo Investment, the largest transaction on Poland's commercial real estate market in recent years. Poland's emergence from the ashes of communism to first class investment opportunity over the last few decades is as good a confidence builder as it is a value builder. Healthy fundamentals across retail, commercial and industrial space point to a revival in fate of Poland's regional cities and may well extend to its smaller cities.And for that reason using the word regional cities or tier-2 cities in Poland's context can sometimes be a misnomer. If Warsaw has dominated the news and economic narrative as the capital city, Poland's regional cities are attracting significant capital of their own.
Statistics on real GDP growth from the European Union show Poland will continue its solid pace of 3.5% growth both in 2016 and 2017. Comparatively, the Union as a whole is expected to grow at a more sedate 1.9 % to 2%, proving once again that our timing couldn't have possibly been better. The inaugural fDi Magazine's Polish City of the Future 2015/2016 ranking lists Lodz, Poland's third biggest city as having the best strategy for attracting foreign direct investment followed by Katowice, Wroclaw, Gdansk and Krakow. It is no surprise that companies like Amazon, Google and Hewlett-Packard find the lure of Poland's regional cities almost irresistible. Long overlooked by investors in favour of Warsaw, Poland's regional cities are increasingly finding favour with businesses only too happy to locate their back office functions in Europe's most vibrant economy. With many developed markets barely scraping together respectable GDP figures, developing markets like Poland offer the best opportunities for companies looking to globalise and for Redefine to provide that space. As the Polish economy goes from strength to strength, our investment in retail and commercial property in key cities from Warsaw to Wroclaw should provide real value and good returns from this high quality portfolio enjoying an average occupancy rate of 95%. It is squarely a long term investment and we view the country as a reliable high-yield investment market with holding comprising of over 450,000 sqm of lettable area. A significant upside of this acquisition is the right of first offer on over Euro 500m worth of newly developed properties from the large retail and office development pipeline of Echo. Furthermore, Redefine's 25% participation right in these developments gives it access to the exciting growth potential of a pipeline of properties via profit share if these properties are sold to third parties. Among the anticipated trends that we might witness in 2016, it is worth mentioning the high level of demand for retail and office space in regional cities that lends us that scale. It is not just Warsaw that offers value but many of the country's regional cities that are flirting with potential. The pace of investment especially in Warsaw and moreso in other regional cities particularly in office space can be attributed to international companies outsourcing parts of their business to Poland. While it might have started off as a pre-dominantly call centre hub, many international firms are now considering Poland for R&D, SCC and ICT operations. Poland's move away from managing simple outsourced tasks from its infancy days to delivering more sophisticated technology solutions has attracted the likes of Samsung, who have established the largest R&D facility outside of China. Furthermore its education system which ranks in the Top 5 in Europe has the trust of global financial giants like BNP, Citi and HSBC who are banking on Poland's highly qualified graduates. Poland is also becoming a popular destination for warehousing because of its central location which makes it an ideal gateway into Western Europe. Amazon's three distribution centres in the country, two in Wroclaw and one in Poznan roughly the size of Sandton City and the adjacent Nelson Mandela Square put together suggest that even in the age of online transactions, fulfilment still depends on brick and mortar structures. Moreover with Amazon looking to launch its own air freight services to fully control its logistics chain; it is this space that is likely to dominate investment activity. Student accommodation is another growing sector with rental yields of between 8% - 9%. One of the main reasons for this is the excellent education system on offer in Poland. A number of students from many parts of the world come to Poland's schools and universities keeping this sector abuzz with activity. While Credit Suisse in its Global Wealth Report 2015 confirms that the number of dollar millionaires in the world dropped slightly on the back of weak exchange rates, the number of millionaires in Poland is set to increase from 44,000 in 2015 to 77,000 by 2020, indicating a growing potential for luxury housing. There is more to Poland's attractiveness than is described here - for us it has been the timing. Having now planted the South African flag, we will now keenly focus on the set of opportunities that will drive shareholder value. Our strategy for Poland is what we use at home - we're not landlords, we're people.
Poland is on track to join the G-20 list of the largest economies in the world by 2022 on the back of its impressive and vertical growth. Already the largest economy in Central and Eastern Europe (CEE), Poland has more than doubled its GDP since 1990 from approximately USD 312 billion to over USD 716 billion in just over two decades. And if you thought this stable and booming economy was reason enough to put out the wodka, it seems Poland is in no hurry to celebrate as it continues to work hard attracting foreign investment much to the chagrin of other CEE markets. The return of big deal making is also supercharging the Polish property market which is slowly inching towards the heady highs of 2007. Poland is a good news story and there are many reasons that underpin it's emergence as an investment destination of choice in Europe, particularly the country's strategic location providing a gateway to emerging markets of CEE. Following the cooling of trade relations between Germany and Russia, it is no surprise that Poland is now Berlin's most important trade partner in Eastern Europe. In the backdrop of this exciting growth and imminent opportunities, we at Redefine Properties have chosen to significantly broaden our offshore footprint via an initial 75% investment into a 1.2 billion euro high-yielding commercial platform comprising 18 properties in the rapidly-expanding Polish market. Poland also remains the only country in the EU that emerged unscathed from the recession due to a high domestic demand. This in part can be attributed to high levels of education amongst its student populace, who in turn contribute to economic activity and spend. Unemployment, which has been one of the vexing problems of the Polish economy for many years, has dropped to under 10% from previous highs of between 20%-30% just a decade before. It wouldn't be far-fetched to attribute some of Poland's growth to entrepreneurship and hard work while most of it comes from market oriented reforms. The catchment of a younger, educated and employed population contributing to retail spend fits into our overall acquisition strategy of this portfolio. Echo owns a portfolio of office and retail space in Poland. Retailing is fundamentally a consumer oriented activity and therefore this acquisition has the size and the scale to make a significant contribution to our holdings. Poland's political and economic landscape mimics those of countries in Western Europe with yields looking much more attractive on the back of fairly lower investment. Polish retail real estate is particularly attractive as Poland has several large regional cities like Wroclaw, Poznan and Szczecin amongst others. Poland's medium-sized and smaller cities like Kielce, Kalisz, Jelenia Gora and Belchatow are also witnessing a real boom in leasable space driven by the country's continuing economic growth, declining unemployment, and highly-educated workforce. We are seeing a surge in demand in the Business Processes Outsourcing sector (BPO) in cities like Katowice, Poznan, Gdansk, Lodz and Tri-City. Poland's tech sector advantage compared to Asia comes not only from its proficiency in English language and the moderate labour costs but also the well qualified workforce leading to companies being only willing to locate their R&D centres in Poland. Poland has been on our map for quite a while and we have shown restraint in making deals in the market for a long time. We were waiting for the right assets and the right time and it's only fair to suggest - good things come to those who wait.
Redefine Properties significantly expands offshore footprint following record setting 1.2 billion euro Polish commercial property deal. Johannesburg, South Africa, 01 March 2016 – South African Real Estate Investment Trust (REIT) Redefine Properties is significantly broadening its offshore footprint via an initial 75% investment into a 1.2 billion euro high-yielding commercial platform comprising 18 properties in the rapidly-expanding and exciting Polish market. The deal, which will be financed via debt and equity at a proposed 60% gearing at the property level, is the largest ever real estate investment transaction in Poland. It is also the largest ever single transaction of income generating real estate assets in Central Eastern Europe. Echo Investment is a recognized market leader in the Polish and Central and Eastern Europe commercial and residential property development and investment space, having completed over 115 real estate projects in 37 cities and 4 countries. Redefine’s executive Chairman Marc Wainer calls the deal “a game-changer” for Redefine. “It significantly advances our international strategy – it has the scale, the right partners and the ability for growth to take a major part of our business to the next level. The 18 properties tick all the boxes from an investment perspective and allows us to take advantage of what will be positive yield carry,” he says. The return profile is attractive generating total distributable income of 46 million euro. “These are all high quality properties with average portfolio occupancy rate of 95% and a large share of modern and sizeable properties,” says Wainer. Poland is the largest country and market in Central and Eastern Europe with a population of around 38m and GDP growth of about 3.5% a year. Importantly, it has a large, stable and liquid real estate market which has become increasingly attractive to foreign investors over the last few years due to its high growth potential and scalability. A significant benefit of the agreement – which is still subject to the approval of the European Commission, is further complemented by a right of first offer on over €500m worth of newly developed properties from the large retail and office development pipeline of Echo, with more than 80% of the projects expected to be delivered within the next 2 years. Furthermore, Redefine’s 25% participation right in these developments gives it access to the exciting growth potential of a pipeline of properties via profit share if these properties are sold to third parties. “This provides us with a unique path to the leading pure play Polish commercial real estate platform with significant further growth and value upside potential,” says Wainer. The deal was made possible after Echo made a strategic decision to split its high yielding platform from its development and residential business and to find a buyer for the commercial real estate platform in which it will retain a 25% stake. “This deal moves the needle as economic growth is driving demand for office space in Poland and opportunities in retail are even more exciting as disposable incomes have improved in lock-step with economic growth,” says Wainer. With rand weakness persisting and inflation on the rise in South Africa, Redefine believes offshore driven tail winds are anticipated to offset the domestic head winds. The low interest rate environment in certain overseas markets will be exploited by taking advantage of the positive yield spreads that are currently available. Apart from the Polish deal, the company is also in the process of establishing an investment presence in Spain and diversification into student accommodation in Australia. “Although 2016 is proving to be a tenant’s market across all domestic sectors, it is not all doom and gloom for us at Redefine as our geographic diversification now really begins to work for us,” concludes Wainer. About Echo Investment: Founded in 1994, Echo Investment is a recognised market leader in the Polish commercial and residential property development and investment space with a strong regional footprint. It has completed over 115 real estate projects in 37 cities and 4 countries, with a total area of more than 1 million m2 of which around 446,000m2 is retail and 291,000m2 office space. Currently its portfolio includes 138,000m2 of real estate projects under construction and 136,000m2 in preparation with additional land bank of over 200,000m2 for retail and office space in Poland. It has presence in four real estate sectors including housing, shopping, outlets and entertainment centres, office buildings and hotels. About Redefine Properties: Redefine is a diversified Real Estate Investment Trust (REIT) and is classified as one of the Top 40 companies listed on the Johannesburg Stock Exchange. Redefine manages a property asset base with a market value of approximately R65 billion, comprising local and international property investments. Media Contacts: Jaclyn Lovell Communication Specialist, Redefine Telephone: 011 283 0072 Mobile: 084 618 5584 E-mail: JaclynL@redefine.co.za
Redefine Properties has appointed Antoinette Coetzee as its new Retail Asset Manager. She has held the position of retail analyst at the company for the past three years. Coetzee brings with her a firm grounding in listed equity analysis in the retail, beverage and luxury goods sectors and will now oversee the management of Redefine’s vast retail portfolio. Her new responsibilities include strategic planning for the retail property portfolio with a dedicated focus on driving increased returns and exploiting opportunities to reduce risk and improve the retail portfolio. Andrew Konig, CEO of Redefine Properties, says: “For the past three years, Antoinette has been a key member of our property management team and we believe that her valuable research skills and broad retail knowledge will add value to our retail portfolio.” Before joining Redefine, Coetzee (33) spent eight years as a buy-side and sell-side analyst. She holds a BCom (Hons) in Investment Management from the Rand Afrikaans University (now known as the University of Johannesburg). When not overseeing Redefine’s vast retail footprint, Coetzee enjoys a good Irish whiskey, travel, yoga and photography.