Redefine profits rise 7.5% as SA property recovery accelerates

• Distributable income climbs 7.5% to R3.9bn, with dividends per share rising 7% to 49.06 cents.
• South African occupancy reaches 94.8%, while office vacancies fall to 9.5%, outperforming the national average.
• Loan-to-value improves to 38.8%, with R7.3bn in liquidity and stronger earnings contributions from Poland.

Redefine's recovery turns into growth

JSE-listed Redefine Properties (JSE: RDF) has reported a stronger financial and operational performance for the year ended August 2026, with distributable income increasing 7.5% to R3.9 billion as South African property fundamentals reached their strongest levels in five years.

The diversified real estate investment trust (REIT), which owns and manages office, retail and industrial properties across South Africa alongside substantial retail and logistics investments in Poland, delivered distributable income per share (DIPS) growth of 7% to 56.08 cents.

Dividends per share increased 7% to 49.06 cents, supported by an 87.5% payout ratio. Redefine's South African property portfolio includes prominent assets such as Rosebank Link, Rosebank Towers, Alice Lane and 90 Rivonia in Johannesburg; Centurion Mall in Gauteng; Kenilworth Centre and Black River Park in Cape Town; and S&J Business Park in Germiston.

Its Polish exposure includes the EPP Core retail portfolio and European Logistics Investment (ELI) assets. The results mark an important shift from portfolio stabilisation towards renewed earnings growth.

CEO Andrew König said: “Earnings growth momentum is there, our balance sheet is materially stronger and operating fundamentals are improving across the board.”

FY2026 Results: The Investment Snapshot

Like-for-like net property income increased 4.1% in South Africa and 4.8% across Poland's EPP Core retail portfolio, demonstrating improving underlying asset performance.

South African offices lead the recovery

One of the strongest signals came from Redefine's office portfolio, where vacancies declined from 13.0% to 9.5%, below the SAPOA national average of 11.8%. Approximately 96% of Redefine's office exposure is concentrated in A- and P-grade properties.

Chief Operating Officer Leon Kok said: “All of our operating metrics are the best they have been since 2022, across occupancy, renewal reversions, retention rates and renewal success rates.”

Key South African property highlights:

• Offices: Vacancies reduced to 9.5%, with negative rental reversions narrowing to -12.3%.
• Retail: Occupancy remained at 95.2%, while renewal reversions improved to +3%.
• Industrial: Occupancy reached 97.2%, supported by positive rental reversions of +4.6%.
• Portfolio-wide: South African occupancy improved to 94.8%.

Retail rent-to-turnover remained at 7.4%, suggesting rental levels remain manageable relative to tenants' sales. Industrial property remains a priority for future investment.

Kok explained: “Industrial continues to be the cornerstone of the South African portfolio’s performance and it will continue to be the area we look to expand from a capital allocation point of view.”

Renewable energy adds R208m to earnings

Redefine's early investment in renewable energy is delivering measurable financial benefits. Having started investing in solar power in 2016, the group expanded installed solar capacity by 11.7 megawatts peak during FY2026, taking total capacity to 70.1MWp.

Renewable energy contributed R208 million, equivalent to 5.3% of group earnings. Beyond reducing exposure to rising electricity costs, the investment supports operational resilience and strengthens the appeal of Redefine's buildings to tenants.

Poland now contributes almost 29% of earnings

Redefine's Polish investments have become an increasingly important contributor to group performance. Poland generated just under 29% of group distributable income, compared with approximately 24% a year earlier.

Key operating indicators:

• EPP Core retail occupancy reached 99.3%.
• European Logistics Investment vacancies declined to 1.5%.
• EPP Core like-for-like net property income increased 4.8%.
• The Horse Group joint venture restructuring became effective on 1 October 2026.

König said the conflict in Ukraine continues to weigh on institutional investment sentiment, but Polish property operations remain resilient.

“The EPP portfolio is basically fully let, the property fundamentals are very positive, and we are probably more affected by the fuel price than by the situation in Ukraine.”

Balance sheet strength restored

Redefine's financial recovery is also reflected in its lower debt exposure. Group loan-to-value has declined from a peak of 50% in FY2020 to 38.8% in FY2026, while see-through LTV decreased from 54.5% to 44.8% over the same period.

Chief Financial Officer Ntobeko Nyawo said: “Our consistent and prudent risk management has delivered a stronger balance sheet that drives our growth.”

Financial highlights include:

• R7.3 billion in cash and undrawn debt facilities.
• Interest cover improved to 2.3 times.
• Cash generation across South Africa and Poland reached 99.7%.
• R13.5 billion of debt refinanced during the year.
• Group debt margins reduced from 1.8% to 1.7%.
• A €323.9 million EPP refinancing reduced its debt margin by 56 basis points.

König said the group has prioritised capital recycling and reinvestment rather than relying on shareholders for additional funding.

FY2027 Outlook: Growth despite economic headwinds

Redefine expects a more demanding operating environment in FY2027, with weaker economic growth, consumer pressure, elevated borrowing costs and geopolitical uncertainty presenting challenges.

Nevertheless, the group forecasts further earnings growth.

FY2027 guidance:

• DIPS growth of 3% - 5%.
• Forecast DIPS of 57.7 - 58.9 cents per share.
• Dividend payout ratio maintained at 87.5%.
• Continued focus on operational efficiency, selective investment and disciplined capital allocation.

König said: “Our operational momentum will be pitted against geopolitical friction in 2027, but we are entering this period in a far stronger position than we have in previous upward rates cycles.”

The Bottom Line: What it means for REIT investors

Redefine's FY2026 results suggest its operational turnaround is gaining traction. Improving office occupancy, positive industrial and retail rental trends, growing Polish earnings and a stronger balance sheet have helped the group return to sustainable distributable income growth.

For investors, the most important indicators to monitor in FY2027 will be distribution growth, rental reversions, debt costs, occupancy and the performance of Redefine's Polish investments.

The recovery is encouraging, but a stronger operating portfolio does not automatically translate into share-price gains. Valuation, interest rates and market sentiment remain important.

König summed up the group's approach: “We are entering this period with our eyes open, but also on the lookout for opportunities.”

For more information: www.redefine.co.za