May 15 2025 12:45
SOUTH AFRICA
JSE-listed Redefine Properties, which is one of the largest landlords in South Africa (SA) and also owns assets in Poland, is optimistic that SA will experience an upturn in economic growth in 2026 and beyond.
The group released financial results for the six months to end-February 2025 on Monday this week, during which CEO Andrew König said Redefine had weathered challenges locally and abroad and now needed the SA economy to play ball so it could grow its dividends more aggressively. Redefine declared a dividend per share of 20.42 cents, 0.74% higher than 20.27 cents in the comparable 2024 period.
The Real Estate Investment Trust (Reit) said its core operating segments delivered organic growth in the reporting period, “underscoring the efficiency, durability and quality of its asset platform”.
Profitability continues to improve across all regions, driven by improved occupancy levels and disciplined cost management, R4define said. The group-wide net operating profit margin rose to 76.9%, up from 76.5% in the comparable period, with South Africa at 79.1% and EPP core (Poland) at 77.2%. EPP refers to Redefine’s Polish subsidiary which owns shopping centres and offices. EPP’s core occupancy reached a near-full 99.2%, while local occupancy also showed improvement. Redefine said this signaled the resilience of the leasing market despite ongoing rental pressures, particularly in the local office sector.
But the market did not appear to be overly impressed by the results with its share price down 4.12% over the past seven days. Redefine’s share price had fallen 1.13% by 13:00 on Thursday, sitting at R4.37 and giving the group a market capitalisation of R31.8bn.
CEO Andrew König said Redefine had managed numerous challenges and changing global dynamics in the past five years. He described this period as “a game of snakes and ladders, shaped by successive global shocks, from COVID-19 to energy crises, warring conflicts, interest rate hikes, and more recently trade tensions”.
“These disruptions have heightened uncertainty, undermining capital market stability and unsettling business confidence that property cycles rely on,” it said.
“Our half-year results reflect measurable improvement, an opportunity-led strategy, and a well-capitalised balance sheet that positions us to weather volatility and drive long-term value creation,” said König.
During the half-year period, Redefine managed to improve its loan-to-value (LTV) to 41.2%, moving closer to its targeted 38-41% range. SA investors tend to prefer for LTVs to be below 40% in SA. An LTV is a measure of financial health for a property company, having being calculated by comparing its relative debt to properties. A key contributor to the LTV was the ongoing simplification of Redefine’s Polish joint venture. König said this was a strategic priority aimed at lowering LTV, reducing equity risk, and alleviating high finance costs.
“Disposing of select joint venture interests would free up capital to reduce debt or reinvest into core assets, both of which support earnings and reduce equity risk,” he said.
Chief Financial Officer Ntobeko Nyawo said Redefine refinanced most of its R3.5bn in maturing debt in the 2025 financial year, with only R500m remaining. The group’s liquidity position improved to R6bn from R4.8bn at August 31 2024. He stressed that Redefine had ample reserves to cover maturities through to 2026, which was a strong buffer as trade-related tariff wars play out.
As much as 77.6% of total debt was hedged for an average tenure of 1.1 years and the maturity weighted average term of debt was at 3.4 years. Moody’s reaffirmed Redefine’s Ba2 rating with a stable outlook, supporting continued access to debt capital markets.
“Our proactive approach, including the successful issue of R2.1bn in bonds this period, reflects the strength of our debt funding relationships,” said Nyawo.
According to chief operating officer Leon Kok, Redefine’s operational performance reflected its sustained focus on efficiency, asset quality, and tenant retention. In South Africa, overall portfolio occupancy improved to 94.7%, with the industrial sector achieving standout results with just a 1.1% vacancy, lease renewal reversions of 4.6%, and high tenant retention, all driven by active asset management.
The retail sector also showed a positive turnaround, recording the first positive lease renewal reversion in over three years at 0.4%, he said, which indicated improving tenant sentiment and “the strength of dominant, well-located centres”.
“By contrast, the office portfolio remains challenging due to a national oversupply and constrained rental growth which places pressure on renewal reversions. However, nodes like Rosebank and parts of the Western Cape are seeing strong demand for P-grade space,” Redefine said.
Kok said economic growth and political stability, along with clearer interest rate direction, would be key to unlocking rental growth in the office market.
Redefine made progress in its renewable energy drive.
“We increased our installed solar PV capacity by 20% during the period to 52 MWp, and we’re targeting a further 25% increase – around 13.3 MW – over the next 6 to 12 months,” said Kok.
“This will bring our total installed capacity to over 64 MWp, in line with our commitment to reduce reliance on the national grid and drive long-term sustainability,” he said.
In Poland, Redefine’s EPP core retail platform maintained an exceptional occupancy of 99.2%, with a healthy rent-to-sales ratio of 9.1%, indicating sustainable tenant health and rental affordability.
Redefine’s Polish logistics platform (ELI), co-owned with Madison, was progressing with a planned portfolio division and revised shareholders agreement, which is expected to be finalised by June. Vacancy in this portfolio is projected to decline from 6.6% to 3.5% by June, thanks to recent leasing activity.
Redefine would develop its self-storage platform in Poland, with 10,000 square metres of net lettable area currently under development and 38,000 sqm under consideration. The initial €50m equity commitment is being deployed into these developments, and the company is actively seeking a co-investment partner to match this with an additional €50m in capital.
Redefine reaffirmed its distributable income per share guidance of 50 cents to 53 cents for the period and expected to maintain a dividend payout ratio within the 80-90% range. The company’s strategic focus remains firmly on disciplined capital allocation, simplification of joint ventures, organic growth, and operational efficiency.
“We are not chasing expansion for its own sake,” said Konig. “Our goal is to enhance the quality and performance of our current portfolio, maintain liquidity, and continue creating long-term value for our stakeholders. The recent sale of Power Park Olsztyn in Poland, increased ownership in Pan Africa Mall from 51% to 68%, and the completion of its second expansion phase are all examples of how we are optimising our asset base,” he said.
alistair@propertyflash.co.za