Redefine de-risks balance sheet ahead of anticipated recovery

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REDEFINE Properties has trimmed and simplified its local and offshore property platforms to de-risk its balance sheet and provide it with sufficient liquidity to take up new opportunities and potentially resume paying dividends.

Redefine decided not to pay a dividend for the 2020 financial year because of uncertainty related to Covid-19, but progress on preserving liquidity and managing risks meant a dividend could possibly be paid again, chief executive Andrew Konig said in a pre-close statement yesterday.

The group’s share price slipped 0.47 percent to R4.25 yesterday morning. However, the price had gained 28 percent since December 30, which was broadly in line with the 24 percent rise in the SA Listed Property Index over the period.

“Our focus has been on implementing our strategy and looking through the cycle, which positions us well for the eventual turnaround,” Konig said.

He said although overall confidence had taken a knock from the recent severe unrest, the unrest had not taken the wind out of the sails of the economy, and the growth momentum of the first half of the year had not been lost.

The unrest had, however, highlighted the urgent need for socio-economic transformation – “an absolute necessity already amplified by Covid-19,” said Konig.

In the pre-close presentation for the year to August 31, chief financial officer Ntobeko Nyawo said: “We would like to be at sub-40 percent on our loan-to-value ratio, and we are making significant progress to achieve this in line with a well-crafted plan to right-size our asset platform.”

Nyawo said Redefine had improved its liquidity, with R5.6 billion in cash and committed access facilities on hand, compared to R2.8bn in the last reporting period.

Konig said one of the keys to Redefine’s future would be to ensure it adapted and innovated in an inclusive way to meet new, evolving demands.

“The pandemic and social unrest highlighted the need for inclusivity, and so our ‘moonshot’ strategy will focus on this theme. It entails ensuring collaboration with communities and stakeholders, especially tenants in the office space,” he said.

“We need to ensure we are relevant to our users’ needs all the time. We are also harnessing technology to leverage off data more smartly,” said Konig.

He said the success of the R1bn sustainability bond – Africa’s largest by a real estate investment trust – was an example of the new approach to grow Redefine’s future.

“It gives us a platform to launch further bonds of this nature, but which are longer dated,” he said.

Meanwhile, damage from the July unrest “is fortunately less severe than we initially thought, with the rebuilding and reinstatement of properties set to happen faster than anticipated”.

Redefine said it had adequate South African Special Risk Insurance Association cover.

Chief operating officer Leon Kok said footfall and tenant in-store activity suggested the “very pessimistic outlook at the height of Covid-19 and lockdown” had been unwarranted.

“Online retail continues to evolve, but … it is clear it is important that in-store experiences are maintained,” he said.

He said more people were returning to workplaces. The industrial portfolio was resilient. Solar photovoltaic installations would be expanded to just more than 12 megawatts across the portfolio.

Offshore, the logistics platform continued to expand by way of development activity, and valuations were benefiting from strong investor demand.

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