South African real estate investment trust (Reit) Redefine Properties has reported improved profitability in its financial results for the six months ended February 28.

Overall, the Reit explained, on May 12, its core operating segments had managed to deliver organic growth during the period.

The increase in profitability was driven by improved occupancy levels and cost management measures, CEO Andrew König pointed out.

The group-wide net operating profit margin rose to 76.9%, up from 76.5% in the comparable period last year, with South Africa at 79.1% and the group’s Poland segment at 77.2%.

Redefine’s Polish property occupancy levels reached a near-full 99.2%, while domestic occupancy also showed steady improvement, signalling the resilience of the leasing market despite ongoing rental pressures, particularly in the South African office sector.

König said the past five years were “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. He said these disruptions had heightened uncertainty, undermining capital market stability and unsettling business confidence that property cycles rely on.

“Redefine [is] reshaping itself to capitalise on the upside to thrive amid complexity. 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,” König said.

The Reit reported an improvement in its loan-to-value (LTV) to 41.2%, moving closer to the targeted 38% to 41% range. A key contributor was the ongoing simplification of the Polish joint ventures (JVs), which is a strategic priority aimed at lowering LTV, reducing equity risk, and alleviating high finance costs.

“Disposing of select JV interests will free up capital to reduce debt or reinvest into core assets, both of which support earnings and reduce equity risk,” said König.

Redefine CFO Ntobeko Nyawo said Redefine successfully refinanced the majority of its R3.5-billion in maturing debt in the 2025 financial year, with only R500-million remaining. The group’s liquidity position improved to R6-billion from R4.8-billion as at August 31, 2024, with ample reserves to cover maturities through to 2026, which Nyawo said was a buffer as trade-related tariff wars played out.

He noted that 77.6% of total debt was hedged for an average tenor of 1.1 years and the maturity weighted average term of debt was healthy 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 R2.1-billion in bonds this period, reflects the strength of our debt funding relationships,” Nyawo said.

Redefine COO Leon Kok commented that Redefine’s operational performance reflects 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 a 1.1% vacancy rate, lease renewal reversions of 4.6%, and high tenant retention.

The retail sector also showed a positive turnaround, recording the first positive lease renewal reversion in over three years at 0.4%, indicating improving tenant sentiment and the strength of dominant, well-located centres.

By contrast, Kok said Redefine’s office portfolio remained challenging owing to a national oversupply and constrained rental growth, which has placed pressure on renewal reversions. However, nodes such as Rosebank, in Gauteng, and in parts of the Western Cape saw strong demand for P-grade space.

Kok noted that economic growth and political stability, along with clearer interest rate direction, would be key to unlocking rental growth in the office market.

Redefine also touted progress made in its renewable-energy drive.

“We increased our installed solar PV capacity by 20% during the period to 52 MW, and we’re targeting a further 25% increase – around 13.3 MW – over the next six to 12 months. This will bring our total installed capacity to over 64 MW, in line with our commitment to reduce reliance on the national grid and drive long-term sustainability.”

“We estimate that 21% of our total consumption will now come from renewable sources. It certainly will both bode us well from a carbon footprint point of view, but more importantly, from an economic point of view,” Kok said.

Redefine reaffirmed its distributable income per share guidance of 50c to 53c for the period and expected to maintain a dividend payout ratio within the 80% to 90% range. König said that the company’s strategic focus remained on disciplined capital allocation, simplification of JVs, organic growth and operational efficiency.

“We are not chasing expansion for its own sake. Our goal is to enhance the quality and performance of our current portfolio, maintain liquidity and continue creating long-term value.

“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,” König said.

He said that, looking ahead, Redefine would focus on harnessing technology as an enabler of more efficient operations and value creation.