JSE-listed real estate investment trust (Reit) Redefine Properties has posted 5.9% higher distributable income at R1.5-billion for the six months ended February 28.
Distributable income a share amounted to 26.33c apiece, compared with distributable income a share of 26.18c apiece in the prior corresponding period.
Profit for the period amounted to R2.2-billion, compared with a profit of R1.4-billion posted in the six months ended February 28, 2021.
The company attributes the solid performance to the easing of Covid-19 restrictions and improved retail centre footfall in South Africa.
The Reit expects its expanded exposure to the Polish retail sector through its takeover of fellow Reit EPP, in March, to bear fruit in the remainder of the financial year.
Redefine has declared an interim dividend of 23.69c apiece, compared with no dividend declared for the prior interim period.
CEO Andrew König says that, with the world coming out of Covid-19 and currently experiencing the supply chain impacts from the conflict in Ukraine, it is safe to say that the company must continue to expect the unexpected and, through its integrated approach to making strategic choices, continue to manage risks and focus on quality assets.
He expects the challenging global economic environment to persist, at least for the medium term, including higher inflation as long as the war in Ukraine continues.
However, König did not expect the war to have an impact on the group’s property valuations heading into the second half of the financial year.
Redefine has posted an average collection rate of 101.3% in the period under review, as well as a healthy 41.9% loan-to-value ratio.
The company has cash and cash equivalents of R4.5-billion, enabling it to deliver on core objectives.
CFO Ntobeko Nyawo is confident that the group’s geographical spread of assets helps it to weather ongoing volatility in the global and local economy.
The Reit sold R4-billion worth of assets in the reporting period, while R3.7-billion worth of asset disposals are at an advanced stage.
“Although the Ukraine war is not directly impacting on our Polish operations, there is strong tenant demand being driven by nearshoring opportunities from the war. We are noticing light manufacturers moving from the East, Russia and Ukraine to Poland, which is driving up demand for space.”
Redefine has exposure to Poland through a 46.5% shareholding in ELI Logistics, and a 45% stake in EPP in the reporting period, which, following EPP’s delisting after the reporting period, grew to 95%.
Of Redefine’s R71-billion property portfolio, about 16%, or R11.5-billion, comprises international real estate investments, as of February 28; however, this will increase owing to its increased exposure in Poland following the acquisition of EPP.
As of May 16, Redefine’s portfolio comprises 41% Polish assets and 59% South African assets.
In South Africa, Redefine says the market is characterised by limited office space demand, and a flight to quality as enquiries for high-quality well-located offices are growing.
Redefine has posted a portfolio occupancy rate of 91.7% for the six months under review. The current vacancy rate for office space sits at 16.4%, while retail and industrial spaces have vacancy rates of 5.9% and 4.4%, respectively.
Meanwhile, the Reit continues to progress its Kwena Square convenience retail centre development, in Roodepoort, Gauteng, at an estimated final cost of R175-million, as well as an industrial development in Brackengate II, in Cape Town, at an estimated final cost of R22.3-million.
The company plans on adding 19.1 MW of solar photovoltaic (PV) capacity to its operations in the remainder of this year. Currently, the group has 31 solar PV installations generating 26.3 MW.
“We have responded to the challenges created by the Covid-19 pandemic to reset all aspects of what we do. We have simplified our asset platform and reduced exposure to multiple risk universes and what we have is now beginning to bear fruit.
“We are primed for creating sustained value as we build the future-fit Redefine of tomorrow,” states König.
Redefine expects its full-year distributable income a share to be between 50c and 55c, with a likely dividend a share of between 45c and 49.5c.