Redefine H1 HEPS quadruples

Property group Redefine has reported a quadrupling of its half-year earnings per share (HEPS), reaching R1.5 billion, representing a 5.9% increase in distributable income. However, the company's revenues were lower due to negative rental reversions, a rise in office vacancies, and ongoing disposal activities. Redefine CEO Andrew König addressed the challenging office market conditions in a recent interview with CNBC Africa. König highlighted the impact of the current economic environment on the office sector, emphasizing the need for sustained economic growth to drive demand for office space. With record unemployment levels at around 35% and sluggish economic growth hovering at 2%, König noted that there is limited momentum in the economy to address the high office vacancy rates. Despite Redefine's competitive advantage in the office market, with overall vacancies at 16% in Sandton and 14% in other areas, König acknowledged the persistent challenge of negative rental reversions affecting the sector. He highlighted the shift of tenants from lower grade properties to higher grade ones as a driving force behind the competition and rental growth dynamics. Addressing concerns of a structural oversupply in the office market accelerated by the pandemic, König expressed optimism about the role of the office in fostering company culture, growth, and talent development. He emphasized the importance of in-person interactions and the limitations of remote work in sustaining productivity and creativity. König also discussed the impact of interest rate hikes on Redefine's business, noting that while higher rates pose challenges due to the company's level of gearing, their hedging strategy mitigates significant impacts. Looking ahead, König outlined Redefine's focus on logistics and retail developments in both Poland and South Africa. The company is strategically positioned to capitalize on growth opportunities in these sectors, with ongoing projects such as the Quena Square retail development in Johannesburg and the acquisition of EPP in Poland. Despite geopolitical tensions affecting the global business landscape, König highlighted the benefits to Redefine's business in Poland, driven by increased demand for logistics space and manufacturing relocations. However, he also emphasized the humanitarian support for Ukraine during the crisis. König called for more efficient policy implementation at the local level to facilitate the company's energy projects and accelerate growth. As Redefine navigates the challenging office market conditions and positions itself for future growth, the company remains focused on leveraging its strengths and strategic initiatives to drive sustainable returns for its stakeholders.