Redefine the risk assessment before the anticipated recovery
REDEFINE Properties has downsized and simplified its local and offshore real estate platforms to reduce its balance sheet risks and provide it with sufficient liquidity to seize new opportunities and potentially resume dividend payments.
Redefine decided not to pay a dividend for fiscal 2020 due to uncertainty over Covid-19, but progress in liquidity preservation and risk management meant that a dividend could potentially be paid again , CEO Andrew Konig said in a pre-closing statement yesterday. .
The group’s share price slipped 0.47% to 4.25 rand yesterday morning. However, the price had gained 28% since December 30, which was broadly in line with the 24% increase in the SA Listed Property Index during the period.
“We have focused on implementing our strategy and reviewing the cycle, which positions us well for an eventual turnaround,” Konig said.
He said that while overall confidence has been hit by the recent severe unrest, the unrest has not taken the economy out of breath and the growth momentum of the first half of the year has not been lost. .
The unrest had, however, highlighted the urgent need for socio-economic transformation – “an absolute necessity already magnified by Covid-19,” Konig said.
In the pre-close presentation for the year until August 31, CFO Ntobeko Nyawo said: with a well-designed plan to properly size our asset platform.
Nyawo said Redefine improved its liquidity, with Rand 5.6 billion in cash and access facilities pledged, up from R 2.8 billion in the last reporting period.
Konig said one of the keys to Redefining’s future will be ensuring it adapts and innovates inclusively to meet new and evolving demands.
“The pandemic and social unrest have highlighted the need for inclusion, so our ‘moonshot’ strategy will focus on this theme. This means ensuring collaboration with communities and stakeholders, especially office tenants, ”he said.
“We need to make sure that we are meeting the needs of our users at all times. We are also leveraging technology to harness data smarter, ”Konig said.
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 developing Redefine’s future.
“It gives us a platform to launch other bonds of this nature, but which are older,” he said.
Meanwhile, the damage from the July unrest “is thankfully less severe than we initially thought, with reconstruction and rehabilitation of properties expected to occur more quickly than expected.”
Redefine said he had adequate coverage from the South African Special Risk Insurance Association.
COO Leon Kok said footfall and in-store tenant activity suggested the “very pessimistic outlook at the height of Covid-19 and the lockdown” was unwarranted.
“Online retail continues to evolve, but (…) it is clear that it is important that in-store experiences are maintained,” he said.
He said more and more people were returning to their workplaces. The industrial portfolio held up well. Solar PV installations would be expanded to just over 12 megawatts across the portfolio.
Offshore, the logistics platform continued to expand through development activity and valuations benefited from strong investor demand.