JSE-listed Redefine Properties has delivered a 7.8% year-on-year increase in its distributable income to R3.6-billion for the financial year ended August 31, compared with distributable income of R3.4-billion in the prior financial year.

Accordingly, the company declared a 7.8% higher dividend a share of 45.84c.

The group reported a higher operating margin of 76.2%, which marked a 1.1 percentage point increase compared with the prior year.

Redefine is also firmly within its target loan-to-value (LTV) range at 40.6%, having improved its LTV from 42.3% in the prior year.  

Net asset value per share, from its South African assets, amounted to 816.45c, marking a 3.6% year-on-year increase.

Basic earnings per share increased by 1.1% year-on-year to 59.45c.

Redefine’s property assets across South Africa and Poland amounted to R103.2-billion in the year, which increased by R1.9-billion in the year under review, while the company has undrawn committed facilities and cash of R6.7-billion.

The company has ended the financial year in better shape than it started, with all key metrics trending positively, says CEO Andrew König. He explains that the group achieved an operating profit margin improvement despite moderate revenue growth, which is testament to the company’s efficiency gains in the reporting period.

COO Leon Kok reports Redefine’s diversified portfolio with retail and industrial assets is offsetting a muted office sector, with the portfolio mix having “paid off well” in the reporting year.

He says operating fundamentals are stabilising with higher occupancies and improved renewal reversions. He adds that asset values across Redefine’s three sectors showed year-on-year gains in the reporting year – even office valuations have turned positive on a total-basis view.

Kok notes that the industrial assets are experiencing strong demand, particularly in the logistics and warehousing space close to major transport corridors. On the rail front, he explains, tenant health remains solid and grocer anchors have supported revenue growth for Redefine in the year.

He believes a swift and peaceful local election outcome could be a meaningful catalyst for offices in Gauteng, by resorting uncertainty on municipal service delivery and enabling businesses to commit to space.

Redefine’s Polish assets, which account for 28% of the group’s assets, delivered a stable performance, with the core retail portfolio in the country maintaining a 99.4% occupancy rate.

The group sold R1.1-billion worth of noncore assets during the year under review and reinvested a similar amount in upgrades and energy efficiency projects. Notably, Redefine now has 58.4 MW of solar power installed at its properties, with a further 8.4 MW being in progress.

Nine of Redefine’s buildings have reached net-zero status, which reflects a focused approach to consistent environmental, social and governance performance. “For us, sustainability and operational resilience go hand-in-hand, they underpin quality and investor confidence,” the company states.

For König, Redefine has shown remarkable resilience and ability to adapt to economic fluctuations and evolving real estate dynamics. “The group’s focus on foresight, adaptability and localised nuances has been key in navigating the challenging landscape,” he states.

The company’s primary drivers of performance remain portfolio quality and balance sheet strength, with its strategy remaining firm on disciplined capital allocation for sustainable growth, recycling noncore assets and simplifying joint ventures to reduce the see-through LTV ratio.

König says there are early signs of rising business and consumer confidence in leasing activity and investor sentiment in South Africa, which is supported by the country’s grey listing lift and prospects of a sovereign credit rating upgrade.

CFO Ntobeko Nyawo adds that Redefine’s balance sheet is strong at an interest cover ratio of 2.2 times, with 83% of the group’s debt being hedged. The company also managed to reduce its weighted average cost of debt to 7% in the year under review, which provides flexibility for growth while maintaining liquidity prudence.

Looking ahead, König is “cautiously optimistic” about the future given the highly uncertain environment, but expects distributable income per share to grow by between 4% and 6% in the new financial year to between 54.5c and 55.5c apiece.