JSE-listed real estate investment trust Redefine Properties has significantly simplified its asset platform and is now well positioned for organic growth. The company also reduced its loan-to-value (LTV) ratio to 40.2% for the financial year ended August 31, from 42.4% in the previous financial year, says Redefine CEO Andrew Konig.

The decrease in the LTV brings it in line with the target range of 38% to 41%. Initiatives to maintain the LTV within this range include ongoing optimisation of the property asset base through the selective disposal of noncore local properties and the sale of two Polish Power Parks, as well as a focus on organic growth in asset values, he notes.

Further, the company realised R9.4-billion in asset disposals, compared with R5-billion in the prior financial year, and increased its net asset value (NAV) a share to R7.20, up from R6.88 in the financial year to August 31, 2021.

“Distributable income of R3.6-billion, representing distributable income of 53.71c a share for the year, is indicative of an underlying healthy and sustainable property asset base despite ongoing uncertainty over the war in Ukraine, local policy instability and weak overall property fundamentals. The group now has a geographically diverse asset portfolio worth R88.9-billion,” he highlights.

A final dividend of 19.28c was declared, bringing the full-year dividend to 42.97c a share. Earnings guidance for the 2023 financial year remains for distributable income of between 54.2c and 56.4c a share.

“We are hard at work on our refocused investment strategy that aims to build a quality, diversified portfolio that delivers sustainable risk-adjusted returns. We will continue with disposal of noncore assets, but the major reconstructive surgery of the group is over, including exiting student accommodation and acquiring [retail property company] EPP,” Konig says.

EPP contributed R284-million to the distributable earnings for the six months from March to August. Redefine expects EPP to contribute €37-million during the 2023 financial year, and also expects an increase in this contribution into the future.

“The 2023 focus areas include a focus on diversity in our operations and implementing and refining our climate resilience framework. We aim to enter into sustainable partnerships with key stakeholders, in particular tenants, suppliers and community-based organisations, to achieve these goals,” Konig notes.

“A standout feature is the sustainability of earnings off the back of a very stable and strong balance sheet, with a loan-to-value ratio of 40.2% supporting our strategy and recovery post the Covid-19 pandemic,” says Redefine CFO Ntobeko Nyawo.

Liquidity improved to R6.2-billion, of which R1.7-billion is cash on hand and R4.5-billion is access to committed undrawn facilities, up from R5.8-billion recorded a year ago, he adds.

Redefine is making strides in its environmental, social and governance (ESG) strategy, and is moving into a phase where collaboration is key for further progress, says Konig.

“We can get clever with energy supply and other interventions, but, when it comes to habits, users of the spaces need to play their role. This is especially important in terms of water and waste," he highlights.

The company has concluded supplier sustainability audits for suppliers in its South African portfolio and has developed a green leasing framework for the South African office portfolio, as well as for its EPP retail portfolio. It has also started a tenant ESG awareness campaign across the group.

Further, the company has had 160 of its office portfolio certified as Green Star buildings, by the Green Building Council South Africa, which is more than 80% of its office portfolio. The company has also, for the first time, certified 20% of its retail portfolio and 20% of its industrial portfolio by gross lettable area (GLA) as Green Star sites.

In Poland, 85% of its office and 70% of the retail EPP portfolio are Building Research Establishment Environmental Assessment Method certified, Konig notes.

Additionally, Redefine has also started three pilot net-zero carbon certifications in its office portfolio.

Meanwhile, the company spent R1.1-billion on maintenance and refurbishments during the year across all three sectors - office, retail and industrial - of its portfolio, with the bulk spent on refurbishments and ensuring its facilities are relevant and ready to be occupied, says Redefine COO Leon Kok.

Further, solar photovoltaic (PV) projects are a big focus for the group and, once its current pipeline of 13.3 MW peak has been built, it will have a total installed capacity of 43.2 MW peak, he adds.

Exciting innovations include a successful bid for an electricity wheeling project in partnership with the City of Cape Town through the planned installation of a 5 MW solar rooftop project at Brackengate, which will be the single biggest rooftop solar PV installation in Africa, he notes.

“This will see us generate electricity off the rooftop of our warehouse and which will supply two of our retail sites in the Western Cape, which could hopefully pave the way for national regulation and growth of this powerful alternative energy innovation,” says Kok.

“Redefine has had to rethink its business in a rising inflation and interest rate environment, the results demonstrate the outcomes of our purpose of creating and managing spaces in a way that changes lives,” concludes Konig.