Although South African real estate investment trust (Reit) Redefine Properties would not cease operating in South Africa, the JSE-listed company would seek to expand its international portfolio.

During the first half of the 2015 financial year, ended February 28, Redefine entered into a joint venture arrangement with Redefine International (RI) to acquire a 50% interest in a portfolio of 56 retail properties in Germany.

Speaking at a media briefing on Thursday, Redefine CEO Andrew Konig said the company had concluded the second phase of its coinvestment – including the acquisition of a complementary portfolio from RI and refinancing its existing debt.

“[This marks] our first direct entry into Europe,” he added.

He highlighted that the total investment was just over R700-million and that Redefine’s aggregate consideration for the first phase of the acquisition was R418-million, at an initial yield of 7.5%.

“The second phase, [the remaining R280-million], was concluded during this week,” he said.

Currently, about 15% of the group’s portfolio was invested offshore and was expected to grow to about 25%. The company’s strategy was to invest in markets where it had local representation, where it had aligned interests with local partners, where the economies were developed, with no currency restrictions, and which had a sophisticated rule of law and tax regime.

During the period, the company also acquired European real estate manager Valad for €145-million through its Australian subsidiary Cromwell Property Group. The company would see a price yield of 12%, but neutral earnings for the year ahead. “Redefine intends to grow its direct holding over time, as Cromwell prefers commercial office property exposure in Australia,” the company said.

“We have grown the [group’s] portfolio significantly during the period. In total, we have concluded acquisition of about R10.7-billion, [including new South African assets]. Our focus is still in South Africa; if you take into consideration all the investments that have been made, 90% of it was here,” Konig noted.

He said Redefine’s international ownership now stood at 23%. “This has all arisen during April, when Redefine was included in an international Reit. As a consequence, we traded just under 140-million units in a single day, which gave rise to a significant inflow from Europe, principally.”

“We are still very confident in the local property market, despite all our challenges. We continue to be quite bullish in terms of investment activity going forward,” Konig added.