Redefine lifts earnings guidance as operational momentum drives growth

Properties (JSE: RDF) announced in its pre-close update for the year ending 31 August 2025 that it has upgraded its distributable income per share (DIPS) guidance to between 51.5 and 52.5 cents for FY25. This upgrade is underpinned by improved operating margins, enhanced efficiencies, stronger occupancy levels, and disciplined capital management. 

This marks a significant step forward for the Group, which has successfully navigated a volatile macroeconomic backdrop while emerging in a stronger position than at the start of the financial year. 

Resilient through volatility 

“Over the past year, each time we thought the skies were clearing, a new dark cloud appeared. But those clouds have dissipated, and today Redefine is in better shape than at the start of the year,” said CEO Andrew König. “Despite volatility, our diversified platform has absorbed shocks with minimal disruption, underscoring the strength of our business.” 

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Macro tailwinds are now reinforcing the growth story. Load shedding has largely receded, supported by a surge in renewable energy projects and reforms under Operation Vulindlela. Improvements in logistics, from ports to rail, are easing bottlenecks in the movement of goods and underpinning broader economic activity. 

Commercial real estate transactions are also recovering, with Redefine already completing R1.1 billion of local asset sales in 2025 compared to R386 million last year.  

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“We are encouraged by South Africa’s expected removal from the FATF greylist in October, and we remain hopeful for an S&P sovereign credit rating upgrade in 2026, while interest rates have settled at long-term averages, providing stability after a period of steep hikes,” König noted.  

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Operational performance drives earnings 

CFO Ntobeko Nyawo highlighted that Redefine is on track to deliver a net operating profit margin of 77% by year-end, up from 75% in 2024. Recurring income now makes up 99.8% of total earnings, giving investors clearer visibility into future performance. 

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“The upgraded DIPS guidance reflects not only improved leasing and occupancy levels, but also the impact of cost efficiencies, lower funding costs, and proactive debt management,” said Nyawo.

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The group’s liquidity position remains robust with R7.6 billion in cash and undrawn facilities and a weighted average cost of debt reduced to 6.6% while its loan-to-value (LTV) ratio is improving to within the 38-41% target range. 

Retail and industrial lead the charge in SA 

COO Leon Kok emphasised that the local portfolio continues to deliver stable growth. Retail tenant turnover increased nearly 5%, supported by similar trading density growth, strengthening tenants’ ability to absorb rental escalations. Renewal reversions and occupancy levels continue to improve. 

The industrial portfolio remains robust, with sustained demand for modern logistics facilities and strategic land holdings in Johannesburg South and the Western Cape positioning Redefine for further expansion. 

The office sector, while still challenging, shows signs of recovery. Renewal activity has stabilised, particularly in P-grade buildings, giving confidence that positive income growth is on the horizon. 

He also emphasised the Group’s sustainability achievements, noting that Redefine has increased its renewable energy capacity by 9.3MW to 52.5MW during the period, with a further 13MW of projects underway. This investment will add another 20% to the group’s renewable energy footprint. 

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“Sustainability is not a nice-to-have, it is a core operational imperative. By expanding our renewable energy portfolio and reducing reliance on municipal utilities, we are both enhancing tenant appeal and protecting margins against double-digit increases in administered costs,” Kok said. 

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Poland: strength in high-demand cities 

Redefine’s Polish retail portfolio continues to perform strongly, reflecting the overall quality and positioning of its properties within key urban centres. “This just speaks to the strength of the properties within each of the cities where they are located,” König said. “Our Polish portfolio is robust because it is concentrated in cities with the strongest consumer growth and spending power.” 

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Occupancy remains high at 97.9%, with rent collection at 99%. While footfall was slightly down, like-for-like turnover increased 2%, reflecting stronger consumer spend per visit. Operational efficiencies, including rationalised property management and internalised accounting, have lifted margins. 

The logistics platform (ELI) has also performed well since its split from Madison International Realty. Redefine’s portfolio has reduced vacancy from 6% to 3%, delivered 6.3% rental growth on renewals, and maintains a robust weighted average lease term of 5.1 years. 

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König noted: “This has been a significant focus for us because simplifying our offshore joint ventures is key to reducing our see-through loan-to-value ratio. Along with organic growth, these improvements are central to re-rating Redefine’s share price.” 

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Self-storage expansion continues, with a new development in Kraków and two more underway in Warsaw and Gdańsk, which will add nearly 28 000sqm of institutional-grade capacity and position Redefine to attract future equity partners into the platform. 

Turning upside into results 

König emphasised that Redefine is entering FY26 with strong momentum and a sharper growth focus. “What began as an internal call to embrace positivity and mindful optimism through our Upside Connect sessions is now being broadened: it’s not just our upside, but everyone’s upside that should be the rallying point, the Upside of Us. Momentum is translating into tangible results. In real estate, progress can be slow, but once it builds, the benefits snowball and that’s what we’re starting to see. With operational momentum, financial discipline, and supportive macro conditions, Redefine is well placed to continue delivering sustainable growth into the medium term,” he concluded.

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