Redefine Properties would focus on offshore expansion into logistics assets as well as the restoration of under-performing assets in its new financial year. Photo: Simphiwe Mbokazi/African News Agency (ANA)

CAPE TOWN – Redefine Properties would focus on offshore expansion into logistics assets as well as the restoration of under-performing assets in its new financial year, chief executive Andrew Konig said yesterday.

The listed real estate investment trust lifted its full year distributable income by 4 percent to 101 cents per share for the year to August 31, with group assets exceeding R100 billion for the first time. It was also the first time that full-year distribution per share breached R1. The share price increased by as much as 5.68 percent to close at R8 on the JSE yesterday.

Redefine benefits from a diversified portfolio and expansive geographic footprint, with the contribution from international property investments rising to 26.8 percent this financial year from 24 percent of distributable income last year.

Property assets under management expanded to R95.4bn from R91.3bn, while international real estate investments now make up 23.7 percent of the portfolio, from 20.7 percent before.

“Interesting and volatile times are here to stay, and we need to make the most of the resultant opportunities. We are living in a world of costly capital and Redefine is focusing on reducing balance sheet risk while still delivering sustainable quality earnings,” said Konig.

Total tenant retention improved to 93.3 percent from 90.4 percent in 2018. Portfolio occupancy was static at 94.9 percent.

“We have to still grow where we see opportunities. However, we need to be more discerning and selective with our capital allocation and pro-actively seek out recycling opportunities for our non-core assets,” he said.

Redefine introduced a dividend pay-out policy to add another source of funding, which aligned to international Reit best practice and was pitched at a level that posed no tax leakage.

The interim dividend of 48.1 cents a share amounted to a pay-out policy of 93 percent of distributable income, which meant R200 million in cash was retained to fund operational capital expenditure.

“This goes to the heart of sustainability as there is no distress on the business and the cash will fund capital expenditure to maintain operations, giving us an efficient additional source of funding, while also preventing potential tax leakage which could occur in the hands of shareholders if this amount was rather declared as part of the dividend and re-invested as equity,” said financial director Leon Kok.

During the year, R6.9bn was deployed into property assets, with local development activity totalling R2.4bn. “This shows you we are investing in South Africa and leveraging off our well-located properties,” said Konig. 

Offshore expansion came to R4.3bn, with R3.6bn invested in Poland. At the same time, 17 properties that did not meet investment criteria were disposed of for R1bn, at an average yield of 8.2 percent.

During the year, carbon emissions savings from Redefine’s solar installations amounted to about 5 percent of its electricity consumption and equated to taking around 6 300 passenger cars off the road.

Redefine expected distributable income per share in the 2020 financial year to be similar to that of 2019, and the pay-out policy was likely to also be maintained.