South Africa’s largest real estate investment trust (REIT), Redefine Properties, has reported a 4.1% decline in its distributable income for the year ended August 31, 2023, amid challenging economic conditions and rising interest rates.
The company, which owns a diversified portfolio of local and international properties worth R94.1 billion, said its income fell to R3.2 billion from R3.4 billion in the previous year. It also declared a final dividend of 23.48 cents per share, down from 24.75 cents in 2022.
Redefine attributed the income drop to higher net funding costs, lower rental collections, increased vacancies, and lower rental escalations. The company said it faced “unprecedented headwinds” due to the prolonged impact of the COVID-19 pandemic, which affected consumer and business confidence, disposable income, and spending patterns.
The company also said it had to contend with the effects of civil unrest in July 2023, which damaged some of its properties and disrupted its operations. It estimated the total unrest cost at R140 million, of which R100 million was covered by insurance.
Redefine’s chief executive officer, Andrew Konig, said the company had taken several measures to mitigate the risks and challenges, such as reducing debt, improving liquidity, enhancing tenant retention, and disposing of non-core assets. He said the company had also focused on growing its offshore exposure, which accounted for 23.9% of its total assets.
Konig said the company was cautiously optimistic about the outlook for the property sector, as the vaccination program and the easing of lockdown restrictions boosted economic activity and demand for space. He said the company expected a gradual recovery in 2024, supported by low base effects, improved consumer and business sentiment, and increased public and private investment.
He added that the company was well-positioned to take advantage of the opportunities in the market, especially in the industrial, logistics, and data center segments, which showed strong growth potential. He said the company was also exploring new avenues of income, such as renewable energy, student accommodation, and affordable housing.
“We remain confident in our ability to create and sustain value for our stakeholders despite the uncertain and volatile environment. We believe that our resilient portfolio, diversified income streams, prudent financial management, and innovative strategies will enable us to overcome the challenges and achieve our long-term goals,” he said.
Source: Reuters
