REDEFINE Properties says it already sees prospects for expansion in its first venture into eastern Europe.
This comes after it recently snapped up a portfolio of assets in Poland for nearly R20bn.
Speaking yesterday at the company’s Rosebank offices following the release of half-year results, CE Andrew Konig said Poland ticked a lot of boxes in terms of growth potential.
“It’s a game changer. It has the kind of scale we require; we have found local partners with aligned interests; there are expansion possibilities; and Poland is seeing continuous gross domestic product growth way in excess of SA’s,” he said.
Through its investment in Poland, Redefine is gaining exposure to 10 shopping centres and various offices. The deal is being administered through a share purchase and subscription agreement with Echo Investment and Echo Prime Properties (EPP). Redefine is acquiring 75% plus one share of the issued share capital of EPP, which indirectly owns a portfolio of prime real estate assets in Poland.
Already, the benefits of the Polish deal are being felt.
Redefine increased its interim distribution 6.9%, to 41.7c per share.
Old Mutual Investment Group’s head of listed property, Evan Robins, said the interim dividend exceeded expectations marginally. “The dividend outlook is better than expected, and this was due to the impact of the Polish deal, which is very cashgenerative. Some South African property-operating metrics were disappointing,” he said.
Mr Konig said that although Poland was an important investment area for the group, it was not losing focus on its local assets. “Without Poland, we are still growing. We have successfully recycled capital domestically to fund development, as well as new acquisitions.”
In the six months to endFebruary, Redefine’s domestic strategy was centred on existing properties and servicing its development pipeline. It also disposed of its government- tenanted office portfolio.
Redefine said the domestic property scene had been challenging, especially because of the uncertain political climate.
“Nenegate was a hit from hell,” Mr Konig said. “Our foreign shareholding fell to 19% after the December 9 debacle, from 22%. But by March, it had recovered,” he said.
Other domestic challenges included the electricity price, illiquid capital markets and the effects of the drought.
Redefine manages a diversified property asset platform with a value of R67.8bn. On February 29, its domestic property portfolio was valued at R54.3bn.
The group’s international real estate investments provide geographic diversification into UK, German and Australian property markets.
Stanlib head of listed property funds Keillen Ndlovu said Redefine’s results had been expected.
“The outlook looks better, thanks to the acquisition of the Poland assets and (re)development opportunities in SA.
“Redefine continues to be busy with a number of projects and transactions. Hopefully, this will translate to superior growth going forward,” he said.
The share price fell more than 2% yesterday. Shares were trading at about R11.70, valuing the company at about R58.3bn.