Redefine Property Group moves ahead with portfolio restructuring
Property group Redefine Properties has made significant progress in the implementation of its strategy of restructuring and improving the quality of its core property portfolio.
The company currently has about R4-billion in acquisitions and developments in the pipeline, says Redefine CEO Marc Wainer, adding that the company is now in acquisition mode, with over R2-billion in cash and bank funding comfortably available.
The restructure aims to reposition over R27-billion in assets, while ensuring growth. The restructuring strategy will see the number of its South African properties decline from 358 to about 260, while the average property value increases from R50-million to R80-million. The total portfolio value is expected to increase to some R20-billion.
Wainer reports that Redefine has bought three properties valued at R733-million, with a lettable area of 42 243 m2, during the past year. Further, the company bought another two buildings for a combined price of R940-million and has agreed to buy seven office and industrial properties from the Zenprop group for R979.4-million.
Redefine points out that it is also actively and aggressively pursuing the distribution warehouse market, which is expected to make up between R2-billion and R3-billion of the company’s portfolio value.
Meanwhile, the property group reports a number of property disposals during the past year, including the sale of 39 properties for a collective consideration of R938-million.
“Last month, Redefine-linked unit holders approved the unbundling of subsidiary Arrowhead’s properties and, in the process, disposed of 98 properties. The company also concluded an agreement with Arrow Creek Investments for the disposal of a further 12 properties,” says Wainer.
Meanwhile, Redefine has decided not to invest further in areas where experience has shown the local authorities are dysfunctional, inefficient or adopt dubious business practices.
“We are fed up with the rates and taxes of properties increasing at astronomical rates, while service delivery . . . deteriorates, or is nonexistent, so Redefine has opted to vote with its cheque book and will not, under any circumstances, invest in these regions,” he explains.
While investments into these regions give attractive initial yields, the company must ensure it obtains the required internal rate of return over a given period and properties in many of these areas will decline in value or experience a low growth.
“Local authorities are businesses and we are their customers; however, many of them take that [to mean] they can charge what they like as customers do not have the luxury of using an alternative service provider,” he says.
Further, proposed developments and alterations are deliberately delayed and obstructed with a view to receiving bribes to expedite the process. “Redefine will not take part in dubious practices and is no longer prepared to invest the time or money in trying to improve these situations,” Wainer avows.
Nedbank Corporate Property Finance has provided funding for 345 000m² of prime industrial land in the Pomona business node alongside the R21 highway in Johannesburg on behalf of The JT Ross Group. ... Full story