Redefine Properties reports modest dividend increase amid steady organic growth

Redefine Properties lifted its interim dividend per share 0.7% to 20.42 cents a share in the six months to February 28, even though its core operating segments delivered solid growth.

Profitability for the JSE-listed REIT that owns retail, office, industrial, and specialised properties continued to improve across all regions, driven by better occupancy and tight cost management. The net operating profit margin rose to 76.9%, up from 76.5% in the comparable period, with South Africa at 79.1% and the EPP core portfolio in Poland, at 77.2%.

EPP core occupancy reached a near-full 99.2%, while local occupancy also improved steadily, signaling resilience in the leasing market, despite rental pressures – particularly in the local office sector.

Reflecting on the past five years for the group that owns Centurion Mall, Blue Route Mall, and Benmore Centre in South Africa, CEO Andrew König described it as “a game of snakes and ladders,” shaped by successive global shocks, from COVID-19 to energy crises, warring conflicts, interest rate hikes, and more recently trade tensions.

“Despite this, Redefine continues to emerge stronger, reshaping itself to capitalise on the upside to thrive amid complexity,” said König.

He said the half-year results reflected measurable improvement, an opportunity-led strategy, and a well-capitalised balance sheet that positioned the group to weather volatility and drive long-term value creation.

Redefine’s loan-to-value (LTV) improved to 41.2%, moving closer to the targeted 38-41% range. A key contributor was the ongoing simplification of the Polish joint ventures - a strategic priority aimed at lowering LTV, reducing equity risk, and alleviating high finance costs.

“Disposing of select joint venture interests will free up capital to reduce debt or reinvest into core assets, both of which support earnings and reduce equity risk,” said König.

Chief financial officer Ntobeko Nyawo said Redefine successfully refinanced the majority of its R3.5 billion in maturing debt in the 2025 financial year, with only R500 million remaining.

The liquidity position improved to R6bn from R4.8bn at August 31, 2024, with ample reserves to cover maturities through to 2026 - a strong buffer as trade-related tariff wars play out, he said.

The retail sector showed a positive turnaround, recording the first positive lease renewal reversion in over three years at 0.4%, indicating improving tenant sentiment and the strength of dominant, well-located centres.

The office portfolio remained challenging due to a national oversupply and constrained rental growth. However, nodes like Rosebank and parts of the Western Cape were seeing strong demand for P-grade space.

Economic growth and political stability, along with clearer interest rate direction, will be key to unlocking rental growth in the office market, König said.

Redefine increased its installed solar PV capacity by 20% during the period to 52 MWp, and a further 25% increase was planned - around 13.3 MW - over the next 6 to 12 months.

Redefine’s Polish logistics platform (ELI), co-owned with Madison, was progressing with a portfolio division and revised shareholders agreement that was expected to be finalised by June. Vacancy in this portfolio is projected to fall from 6.6% to 3.5% by June due to recent leasing activity.

The self-storage platform in Poland was being advanced with 10 000 square metres under development and 38 000 square metres under consideration.

Redefine reaffirmed its distributable income per share guidance of 50-53 cents (50 cents) for the full year and expects to maintain a dividend payout ratio within the 80-90% range.

“We are not chasing expansion for its own sake, Our goal is to enhance the quality and performance of our current portfolio, maintain liquidity, and continue creating long-term value for our stakeholders. The recent sale of Power Park Olsztyn in Poland, increased ownership in Pan Africa Mall from 51% to 68%, and the completion of its second expansion phase are all examples of how we are optimising our asset base,” said König.

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