JSE-listed real estate investment trust (Reit) Redefine Properties, which has an installed solar photovoltaic (PV) capacity of 40.86 MW, is installing an additional 27.2 MW of capacity across its properties and has a further 17.66 MW of projects in the feasibility stage, COO Leon Kok said on February 27.

Speaking during a pre-closed-period update to the market, he highlighted that, if these projects were all finalised, this would double the company's installed PV capacity to more than 85 MW within the next two to three years.

Additionally, the company is currently focusing on building renewable energy systems in its industrial portfolio of properties, which currently only has 3 MW of installed capacity.

However, Redefine is currently installing 11.4 MW of capacity across its industrial properties, and its industrial solar feasibility studies are investigating adding a further 10 MW of solar capacity in its industrial portfolio.

The company has installed solar PV systems across most of its retail portfolio, which has an installed capacity of 34 MW and Redefine is installing a further 14.6 MW of solar in its retail properties. However, it only has 6.7 MW of further solar projects for retail being investigated in terms of feasibility over the medium term.

Meanwhile, the company has also made good progress in terms of electricity wheeling arrangements.

"We have concluded some technical assessments, and we are progressing with our wheeling pilot project in the Western Cape. The network upgrade and the infrastructure development are underway to implement a 5.7 MW rooftop solar plant at the Massmart distribution centre, in Brackengate."

Blue Route Mall and Kenilworth Centre had been earmarked as offtakers for the wheeled energy from the Massmart distribution centre in the first half of the company's 2025 financial year, he added.

"The project should be live by the end of this year and should be commissioned by January or February next year. This is a good opportunity for us and an example of where our renewable energy efforts will move into in the future," said Kok.

While it has had some frustrations with its power purchase agreements (PPAs), Redefine is negotiating a PPA to secure 14 MW, supplying around 39-million kWh a year, to its Eskom-connected offices and buildings.

"We are hoping for this to be completed towards the end of the 2025 calendar year."

Meanwhile, CEO Andrew König said Redefine expected macroeconomic challenges would start to ease this year but warned that there were still notable risks that could disrupt inflation expectations.

Therefore, the Reit’s focus on energy, water and waste efficiencies is not only based on its environmental responsibilities and helping its tenants to reduce their environmental impacts, but also form part of Redefine's strategy to limit the impact of elevated levels of inflation and administered price increases.

"We aim to preserve the profit margin through a focus on efficiency, disciplined cost control and improving the renewable energy mix," said König.

Additionally, the company would accelerate its digital transformation journey to harness data insights to simplify processes and monitor trends in costs to achieve efficiencies, he added.

Further, the group’s sustainability focus also helps to improve its reputation. Redefine will implement a multipronged sustainable energy, water and waste solutions strategy to reduce its reliance on grid-supplied energy, municipal water and waste services.

"We will reduce our energy and water costs, support business continuity and lower our carbon emissions through this strategy," he noted.

Meanwhile, the company had appointed consulting multinational Deloitte to analyse its carbon footprint and to identify decarbonisation targets. Redefine should have decarbonisation targets in place by the end of its current financial year, König said.

OPERATING METRICS
The company reported that operating metrics across the board in its South African and Polish portfolios were showing ongoing improvement, despite a challenging economic environment and with its office portfolios continuing to face headwinds in both countries.

It also aims to develop its long-term growth strategy in Poland while exploring capital recycling opportunities.

"Redefine will focus on reducing its loan-to-value (LTV) ratio to between 38% and 41%, as its medium-term target range," said CFO Ntobeko Nyawo.

"Our focus continues to be on gradual debt reduction. Our see-through LTV has increased because of the dividend, which led to an uptick. However, we are pleased that our cover ratio is stable at 2.3-times."

The group's weighted average cost of debt increased by 20 basis points to 7.3%, up from 7.1% in the prior financial year, on the back of increases in the Euro Interbank Offered Rate during the period, he noted.

"The positive operational print has been offset by elevated interest rates. However, we are maintaining our guidance range of between 48c and 52c distributable income per share," he said.

The company will focus on proactively managing its operating margin across the group to drive sustainable organic growth.

"It is clear to us that our medium-term outlook will largely be driven by organic growth. Therefore, continued positive operating metrics and proactively managing our margins will enable us to drive the quality of earnings," Nyawo said.