Redefine Group results for the six months ended 29 February 2020 1 · Redefine Group results for...
Transcript of Redefine Group results for the six months ended 29 February 2020 1 · Redefine Group results for...
1Redefine Group results for the six months ended 29 February 2020
2Redefine Group results for the six months ended 29 February 2020
Our conversation
We apply an integrated management approach to focus on what matters most
Grow Reputation
Invest Strategically
Optimise Capital
Operate Efficiently
Engage Talent
Creating sustained value for all our
stakeholders
Securing capital in a constrained and costly
environment
Operating in a low growth, rising
administered cost context
Harnessing our people’s skills,
abilities and attitudesLiving our purpose
Strategic matters
Strategic objectives
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Growing reputation01
Our purpose drives us to add value to the lives of our stakeholders
Section
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EnvironmentIncreased solar PV capacity to 25.1 MWp (26 plants)
Green Star certification of 26 buildings in progress, which will take the total Green Star certifications to 100
Developed Green Tenant Guidelines and Supplier Code of Conduct to enforce environmental best practice
SocialReceived a global CDP Supplier Engagement A rating
Total mentees matched to mentors now 1 514 on The Mentorship Challenge platform
Maintained Level 3 BBBEE contributor status
GovernanceFilling the financial director role an opportunity to address diversity
Awarded AAA ethics rating from Ethics Monitor
All board committees comprise independent non-executive directors
Key outcomes for the first half of 2020
The role of ESG has been elevated in every aspect of what we do
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After-hours water consumption at Golden Walk after the smart valve installation
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After-hours water consumption at Golden Walk prior to the smart valve installation
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Golden Walk – total flow
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Our response to COVID-19
Embedding sustainable relationships leading up to and during the lockdown
Stakeholder emphasis to position Redefine for business continuity
Collaborating with investors and funders is underway to ensure that Redefine is provided the space to take the requisite
actions to weather the challenging financial conditions that will arise during and post the lockdown
Reinforcing our purpose and values, so that employees have clarity and are empowered to make commercially defendable
decisions on their own and quickly, while remaining accountable for their actions is a priority during the lockdown
Offering unique value to affected tenants through relief and assistance packages to support their liquidity needs during the
lockdown
Supporting and working closely with our suppliers, brokers and service providers to ensure their businesses survive this
period and position us to receive improved levels of service
Using this crisis as an opportunity to deepen our community purpose by ensuring that we remain focused to create and manage
our spaces in ways that play supportive roles to those more vulnerable than us
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Looking ahead as the new normal unfolds
Achieving stakeholder goals to create sustained value
A source of sustained growth in total returns for
investors and funders
An employer of choice for employees
A differentiated provider of relevant space to tenants
A preferred business partner for brokers and suppliers
A responsible community participant
Second half 2020 focus
Deepen communication and collaboration
Remain relevant to stakeholders
Heighten focus on ESG
Anticipated outcome
Build brand loyalty
Improve stakeholder perceptions
ESG considerations in all aspects of what we do
Our stakeholder goals
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Investing strategically02Section
Positioning the core portfolio to remain relevant to users’ needs
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776
1 843
ELI acquisitions
Working capital
Development activities & capex
Key outcomes for the first half of 2020
Advancing our strategy to diversify, grow and improve the quality of the property asset platform
Property assets under
management now at
R89.2 billion
Offshore expansion totalled
R1.0 billion, with R0.6 billion
invested in Poland
Deployed R1.9 billion
into property assets
Local development activity
totalled R0.8 billion
Capital deployed of R2.7 billion
628
409387
193
179
2423 Capital allocated to developments and capex
European Logistics platform
Retail
Australian student accommodation
Office
Local student accommodation
Industrial
Residential
Rm
80% of property asset
base is local
Progress made on
simplifying and right-
sizing asset portfolio
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Local portfolio profile
A well-located, high-value, high-quality and efficient portfolio
(FY19 | R72.8bn)
(FY19 | 73%)
(FY19 | 18%)
(FY19 | 40%)
(FY19 | 36%)
(FY19 | 19%)
Carrying value
R71.3 billion
73% located in
Gauteng
17% located in
Western Cape
Retail 40% of local
portfolio value
Office 36% of local
portfolio value
Industrial 20% of local
portfolio value
11 09612 870
14 38215 854 15 608
312327 315 302 300
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150
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300
350
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5 000
10 000
15 000
20 000
25 000
FY16 FY17 FY18 FY19 HY20
Impact of portfolio restructure
Average value per m² (R) Number of properties (#)
R #
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Local portfolio headlines
A focus on organic growth
(HY19 | 456 717m²)
(FY19 | R236m)
Active portfolio revaluation
of -0.7%
Completed developments
totaling R94.7 million
Disposals totalling
R707 million
Total letting
at 455 553m²
Average valueper property ofR232 million
Continued focus to right-
size retailers footprint to
improve trading performance
Quality tenants and tenant
retention the key driver of
office performance
Industrial developments
tenant driven with emphasis
on efficiency through design
8.5%
8.6%
9.3%
9.6%
10.6%
0% 2% 4% 6% 8% 10% 12%
Retail
Office
Industrial
Specialised
Student accommodation
Exit cap rate per sector
4% 4%
14%16%
11%8%
36%
7%
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800
1 200
1 600
2 000
Monthly 2020 2021 2022 2023 2024 Beyond2024
Vacancy
Lease expiry profile by GLA (m²)
Th
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* Figures are based on top 19 shopping centres
** Excludes monthly leases
# Excluding properties under development and new GLA
Local retail portfolio overview
Differentiating by creating outstanding places for modern consumer lifestyles
37%
35%
16%
6%
6%Value by type (%)
R28.1 billion
Value
(FY19 | R28.8bn)
3.6%#
Trading density growth
(FY19 | 3.0%)
8.0%*
Rent to turnover
(FY19 | 8.0%)
Completed refurbishments
of R47.5 million
1.4 million m²
GLA
(FY19 | 1.4 million m²)
4.3%#
Sales growth
(FY19 | 4.2%)
95.8%
Tenant retention by GLA
(FY19 | 94.1%)
Edcon (excl. CNA)exposure reduced by 12 286m² to 55 583m²
5.6%
Active vacancy
(FY19 | 4.6%)
-0.3%*
Footfall growth
(FY19 | -1.8%)
-2.5%
Renewal rent reversion
(FY19 | -1.8%)
52.4%**
Renewal success rate by GLA
Community / Small regional
Regional
Super regional
Neighbourhood
Other
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* Excludes monthly leases
Local office portfolio overview
Efficient, modern facilities to enable work-life integration
51%
34%
15%
Value by grade (%)
R25.1 billion
Value
(FY19 | R25.4bn)
93.3%
Tenant retention by GLA
(FY19 | 91.4%)
Completedrefurbishments
of R208.0 million
1.2 million m²
GLA
(FY19 | 1.2 million m²)
-1.5%
(FY19 | -2.0%)
2 500 kWp
Solar PV roll-out of
12.3%
Active vacancy
(FY19 | 10.2%)
57.0%*
Renewal success rate by GLA
at 155 West
Street
R92.4 million
Disposals
Renewal reversion
Installation of WeWork
Rosebank Link achieved a 4 Green Star ‘design’ and a 5 ‘as built’ rating
Premium
A grade
Secondary
(FY19 | 56.7%)
Good exposure to premium node Rosebank
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* Excludes monthly leases
Local industrial portfolio overview
Incorporating key design elements to functionally differentiate our offering
R13.7 billion
Value
(FY19 | R13.8bn)
72.5%*
1.8 million m²
GLA
(FY19 | 1.8 million m²)
2.1%
Active vacancy
(FY19 | 1.8%)
Renewal success rate by GLA
Land disposals
of R104.2 million
97.1%
Tenant retention by GLA
(FY19 | 93.8%)
9.4%
(FY19 | -3.6%)
Renewal rental growth
R241.4 million
Developments in progress Infrastructure
projects
in progress
R468.5 million(FY19 | 65.7%)
Hi-tech industrial
Industrial units
Warehousing / Logistics
Light manufacturing
Heavy grade industrial
Vacant land
Retail warehouse
46%
20%
11%
8%
8% 7%1%
BY VALUE (%)
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Local student accommodation Loans High yielding
Redefine’s interests → Current bed capacity at 8 377
→ Loans of R2.1 billion to various
third parties attracting commercial interest
rates
→ Solar PV plants
→ LED screens, exterior media, kiosks
and wi-fi
→ Park Central residential development
→ Oando Wings
Platform profile
→ Lockdown resulted in shutdown of
universities and residences largely vacated
→ All new development projects placed on
hold to preserve liquidity and due to risk of
not completing it on time for 2021 academic
intake due to disruption by COVID-19
→ Loan to BEE consortium for Delta shares
disposal reflected in the books at market
value of the Delta shares
→ 26 solar PV plants generate 25.1 MWp
→ Non-GLA income growing by 7.5%
→ Park Central comprising 159 units – 36.1%
and 25.7 % by value sold and let out
respectively
Priorities→ Initial disposal transaction fell through,
however demand for specialist assets still
presents recycling opportunity
→ Provide loan funding to secure strategic
partners and provide transformed
opportunities
→ Downside risk on Delta to be mitigated
→ Pipeline of solar PV projects to add another
794 kWp
→ Leverage non-GLA opportunities off
property base
→ Sell / rent Park Central units
→ Sale of Oando Wings to Growthpoint
Investec African Properties
Alternative investments
Diversifying income streams
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*Including Redefine’s foreign borrowings
**Including local assets and borrowings net of cash
International portfolio profile
Geographic diversification in hard currency markets
(FY19 | R22.6bn)
(FY19 | R37.3bn)
(FY19 | R33.1bn)
(FY19 | R12.6bn)
(FY19 | R10.0bn)
(FY19 | 51.7%)
Carrying value
R17.9 billion
Proportional share of
assets R34.8 billion
Proportional share of debt*
R32.4 billion
Listed securities
R12.0 billion
Direct properties
R5.9 billion
Redefine see through
LTV** 52.4%
60%
22%
16%
2%
Geographic spread by value (%)
Poland
Australia
United Kingdom
Africa
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International portfolio headlines
Seeking active asset management opportunities to unlock and sustain value
Disposal of Strykow
EUR49.2 million at a
yield of 6.1%
EPP NAV per share
EUR1.32
EPP carrying value
impaired by
R442.4 million
Introduced joint venture
partner into ELI
Leicester Street
(Australian student accomm.)
average occupancy at Feb
83%
RDI carrying value
impaired by
R121.5 million
55%
18%
14%
9%
4%Value by type (%)
Retail
Hotel
Office
Student accommodation
Industrial
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European Logistics platform overview
Economic growth, e-commerce expansion and infrastructure improvement drives demand
EUR270.3 million
Value of income producing assets
392 384m²
(FY19 | 444 114m²)
EUR13.6 million
GLA added through developments 25 510m²
9.9%
Income producing GLA
Activevacancy
New
developments in progress of EUR62.3 million
Weighted average unexpired lease
term 4.1 years
Completed newdevelopments of
Madisonintroduced as ajoint venture
partner
EUR3.3 million
Disposal of Stykow
Renewal success rate by GLA
0.0%
EUR49,2 millionat yield of 6.1%
36.5%
(FY19 | 13.6%)
(FY19 | -3.8%)
Renewal reversion
(FY19 | 4.5 years)
Acquisition of
15.9ha of land with 72 310m² developable bulk
(FY19 | R295.0 million) (FY19 | 130 633m²)
(FY19 | 16.0%)
29%
26%16%
12%
10%4%
2% 1%
GLA by tenant type (%)
Retailer
Distribution
Production
3PL
Delivery
Vacancy
Packaging
Supplier
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Protecting our net asset value
Focus on restoring value of under-performing assets
RDI REIT PLC Delta Oando Wings
Redefine’s investment has declined
R2.2 billion in carrying value since
August 2016
Changing retail behaviour, Brexit and
balance sheet risk contributed to the loss
in value
Redefine continues to work closely with
RDI to evaluate all options which may
require Redefine to remain invested in
the medium term without committing
further equity
A number of opportunistic approaches to
acquire the RDI shares referenced off
current market prices have been
received and declined
The loan to Cornwall Crescent (BEE
consortium) is reflected at Delta’s share
price as Redefine’s sole recourse is to
the shares
The loan has been written down by
R1.4 billion since inception (June 2017)
– from R9 to under 50 cents per share
Redefine is working closely with
Cornwall Crescent to restore some of
the lost value which, due to COVID-19
has been placed on hold
Growthpoint Investec African Properties
(GIAP) has concluded a portfolio
transaction with our partners RMB
Westport
The sale of our share in Oando for
shares in GIAP has been concluded and
is subject to regulatory clearance by the
Nigerian authorities
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Capital allocation priorities 2020
Allocating capital to position platform for sustained value creation
Improving: R170 million Expanding: R1.0 billion
Revenue enhancing operational capital
expenditure
Solar PV / Smart metering
Local retail development activity
European Logistics platform developments
Australian student accommodation expansion
Local retail developments
Local industrial developments
Local student accommodation developments
Defending: R129 million Protecting: R78 million
Local operational capital expenditure
Local retail capital expenditure
Local office capital expenditure
Capital enhancing operational capital
expenditure
Inco
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Low
Hig
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Long-term value creation potential
Limited Significant
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Our response to COVID-19
Systemic changes in behaviour will shape how we will live, work and play
Retail
→Tenant mix and store offerings will be influenced by a change in consumer behaviour
→Consumers may permanently change their preferred buying channel for certain categories toward e-commerce
→Current preference of neighbourhood / convenience centres becoming the norm
Office
→Trend toward densification and open-plan layouts may reverse
→Public-health officials may increasingly amend building regulations to limit the risk of future pandemics
→Offices expected to maintain its appeal for facilitating interaction, collaboration and productivity
Industrial
→Supply chain risk mitigation and increased levels of inventory further boost already high demands for industrial (logistics /
warehousing)
We are now shifting our thinking ahead to when the crisis is over to:
→Provide a better, and more distinctive, tenant and customer experience
→ Importantly ensure our offering keeps pace with the evolving dynamics of space usage
At this stage, it is not possible to assess the full impact of COVID-19 on the future carrying value of property assets
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Looking ahead as the new normal unfolds
Simplified, focused and significant in each sector / geography
Second half 2020 focus
Renewed focus on space offering
Offshore expansion through development activity
Protect value of property assets
Anticipated outcome
Improve relevance of local portfolio
Expand offshore logistics platform
Minimise TNAV downside risks
Indicative asset platform 3+ years
Property portfolio
Retail
Office
Industrial
Direct local property portfolio
Direct Polish properties
International listed securities
EPP N.V.European Logistics platform
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Optimising capital03Section
Dusting off playbooks from earlier crises is a waste of time
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Key outcomes for the first half of 2020
Strengthening the balance sheet continues to be our most important strategic priority
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1 014
1 609
0 500 1 000 1 500 2 000
Vendor loans repaid
Recycling of capital
Debt raised
Sources of capital of R2.7 billion
(FY19 | R5.8%)
(FY19: 43.9%)
(FY19: 4.3x)
(FY19: 87.3%)
Average cost of debt
increased by 30bps to 6.1%
LTV increased to 44.2%
Interest cover ratio
at 3.7x
Interest rate hedged
on 88.7% of total debt
Healthy liquidity levels, and
all near term debt maturities
substantially refinanced
Funded deployment of capital of R1.9 billion and working
capital of R0.8 billion
Moody’s investment grade
credit rating downgraded to
Ba1 in line with Sovereign
Rm
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Analysis of secured and unsecured debt to property assets
Financial market conditions demand prudent balance sheet management and careful liquidity planning
* Cross currency swaps do not require cash margining
** Local debt net of cash (including cash flow received from sale of ELI on 11 March 2020)# Includes offshore assets of R0.3bn securing local debt## Includes local assets of R5.6bn securing offshore debt
AssetsRbn
DebtRbn
LTV
Secured 58.1 26.9 46.3%
Local 47.0# 21.5 45.7%
Offshore 11.1## 5.4 48.6%
Unsecured 31.1 11.3 36.3%
Local** 19.0 9.6
Offshore 12.1 1.7
Group loan-to-value before inclusion of cross currency swaps 89.2 38.2 42.8%
Mark-to-market unsecured cross currency swaps* 1.2
Local deposit (8.7)
Foreign debt 9.9
Group loan-to-value 89.2 39.4 44.2%
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Update on lowering the LTV
Proven track record in recycling assets despite challenging conditions
Improving the LTV is being addressed through a combination of
→ Local non-core property disposals in progress totalling R2.9 billion
→ Selling Australian assets to realise R4.3 billion
→ Receipt of earn-out fee totalling R0.6 billion from European Logistics platform developments in progress
→ Limiting speculative capital expenditure
→ Moratorium on acquisitions
→ A distribution reinvestment programme considered to be inappropriate given the share price
→ Implementation of dividend pay-out policy
→ Restoring value of under-performing assets
→ Deferment of decision on 2020 dividend to November
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Our response to COVID-19
Adopted a “manage for liquidity and sustainability and not for profit” attitude
→ 73% of April billings collected – May collections will be heavily impacted by lockdown and rental relief packages
→ Liquidity headroom sufficient to absorb ±50% rental decline and 100% dividend withholding from foreign investments up to Aug 2020
→ Banks' attitude is supportive and pragmatic with regards to access to liquidity and covenant compliance
→ R7.7 billion of DCM listed notes outstanding, only R834 million matures in next 12 months
→ All listed offshore entities are sufficiently capitalised to meet liquidity needs
→ Engaging with regulatory bodies on REIT listing requirements and tax implications
Risks during COVID-19
LTV
impact
ICR
impact
Rental relief during lockdown period, and rental deferments X
Property devaluation X
Delayed transfer on sale of non-core properties or sale cancellations X
Possible restrictions on development activity X X
Foreign investments withhold dividends to maintain liquidity X
Further impairment of foreign investments X
Continued ZAR depreciation X
Further credit rating downgrade resulting in higher debt costs X
Strictest covenants LTV = 50% and ICR = 2x
LTV sensitivity analysis
LTV
impact
Rand at 19 April spot FX rates +2.4%
Rand at 19 April spot FX rates and then depreciates by 5% +0.5%
SA property values decrease by 10% (-R7.1bn) +3.6%
EPP written down to listed price (R6.75 per share) +3.1%
RDI written down to listed (GBP0.6 per share) +0.8%
ICR sensitivity analysis 29 Feb 2020
Stressed* at
31 Aug 2020
ICR 3.7 2.5
*Stressed forecasted ICR assumes:
- no foreign cash dividend income from associates, and
- decrease in SA and ELI rental income by 25% for next six months
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5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Jan
18
Feb
18
Ma
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Apr
18
Ma
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8
Jun 1
8
Jul 18
Aug 1
8
Sep 1
8O
ct 18
No
v 1
8
De
c 1
8
Jan
19
Fe
b 1
9
Ma
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Apr
19
Ma
y 1
9
Jun 1
9Jul 19
Aug 1
9
Sep 1
9
Oct 19
No
v 1
9
De
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9
Jan 2
0
Feb
20
Ma
r 2
0
Apr
20
Redefine forward yield R186 yield 5 year swap rate
Looking ahead as the new normal unfolds
Pre-empting the race to liquidity
Drivers of the cost of capital
Second half 2020 focus
Right-size asset footprint to capital base
Bolster liquidity
Apply dividend pay-out policy
Anticipated outcome
Maintain and improve credit metrics
Meet funding commitments and cover short term
liquidity needs
Lower LTV ratio
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Operating efficiently04Section
Managing the variables under our control
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Key outcomes for the first half of 2020
A solid local first half performance in a challenging environment
(HY19: 11.7%)
Active portfolio margin
at 83.0%
Active portfolio occupancy
at 94.0%
Group revenue growth
of 9.6%
New lets 191 840m² and
renewed 263 713m² at an
average increase of 2.2%
Tenant retention
rate at 95.7%
Non-recurring income
almost phased out
2 420 2 5341 801
116 124
16
2 536 2 658
1 817
0
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2 000
3 000
4 000
HY18 HY19 HY20
Rm
Distributable income analysis
Recurring income Non-recurring income
(HY19: 83.4%)
(FY19: 94.9%) (FY19: 93.3%)
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Financial headlines for the first half of 2020
Financial year 2020 will be a tale of two halves
(HY19: 49.19 cents)
(HY19: 16.8%)
(FY19: R45.5 billion)
Half year distributable
income per share 33.46 cents
Net operating cost to income
ratio 17.4%
Market capitalisation at
R13.2 billion
Deferment of half year
dividend payout
Local debt cost increase
due to debt reorganisation
TNAV declined by 59.6 cents
per share to 884.3 cents
per share
Only dividend income
received has been
recognised
Bulk of distributable income
decline due to negative
international contribution
39.0 41.7 44.8 47.3 49.233.5
41.0 44.3 47.2 49.8 51.8
80.086.0
92.0 97.1 101.0
33.5
0
20
40
60
80
100
120
FY15 FY16 FY17 FY18 FY19 HY20
CPS
Distributable income per share
Interim Final
91
2
94
3
91
3
97
7
94
4
88
4
1 0
34
1 0
56
1 0
23
1 0
83
1 0
48
88
4
1 148 1 102 1066 1 035
785
543
400
600
800
1 000
1 200
1 400
FY15 FY16 FY17 FY18 FY19 HY20
CPS
Net asset value per share growth
NTAV NAV Share price
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Contributors to growth in distributable income
Operating in an environment where the knowns are outweighed by evolving unknowns
Rm
Tailwinds
R228 million
Headwinds
(R1 069 million)
HY 2019distributable
income
Local active portfolio
NOI growth
HY 2020distributable
income
Loweradmin costs
Local developed properties NOI growth
Australianstudent
accomm.
Highernet SA finance charges
Lower income on Cornwall
Oando Wings
income not accrued
NOI of local disposed properties
Increase in EUR
funding cost
EPPdividend not
accrued
Increase in AUD
funding cost
Lower sundry income
Chariot income not
accrued
RDI dividend
not accrued
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Decline in net asset value per share (cents)
Our diversified asset platform is capable of absorbing shocks and providing a platform for sustained growth
GBP 4.7
EUR 1.2
USD 0.3
AUD (0.2)
Journal (1.0)
Cromwell (1.1)
Other (1.3)
RDI (1.8)
31 Aug 2019 NAV
OtherStatutory profit excl
revaluation, impairments, amortisation,
EAP and forex
Distributions paid
Write down of goodwill
and intangible
assets
29 Feb 2020 NAV
NAV decrease of international
assets
FV of hedges
Forex gain on international
investments
Forex loss on foreign
denominated loans
Impairment of
international assets
Revaluation of SA
property portfolio
AUD 0.2
USD (0.1)
EUR (1.2)
GBP (6.1)
Oando (0.8)
RDI (2.3)
EPP (3.8)
Intangibles (5.8)
Goodwill (97.7)
EUR 1.4
ZAR (0.9)
*TNAV – Tangible net asset value
TNAV*
943.9TNAV
33Redefine Group results for the six months ended 29 February 2020
Op
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ting e
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ntly
Our response to COVID-19
Supporting the recovery and sustainability of our stakeholders is top of mind
→ A significant amount of work is going into agreeing rental relief packages with emphasis on supporting SMMEs
→ Rental relief is structured according to categories – but handled on a case-by-case basis
→ Negotiations, through the Property Industry Group, are ongoing with large and medium retailers
→ No dividend income from offshore entities, with the exception of European Logistics platform, is anticipated in 2020
→ Proactive utility management and unlocking procurement and discretionary expenditure efficiencies
→ All non-essential costs have been frozen or deferred to support liquidity and absorb extra costs
→ Continued support for all our suppliers and third-party representatives
4%
8%
9%
13%
33%
33%
0% 20% 40%
Pharmacy and personal care
Restaurant and food
Financial services
Grocery Stores / Supermarkets
Other
Apparel
Retail (GMR %)
6%
13%
15%
31%
35%
0% 20% 40%
Warehousing
Midi units and other
Light manufacturing
Modern logistics
Heavy Grade Industrial
Industrial (GMR %)
4%
7%
9%
11%
13%
20%
36%
0% 20% 40%
Retail
Construction, mining & property
IT & Tech
Legal
Government
Other
Financial services
Office (GMR %)
Tenant categorisation by sector
34Redefine Group results for the six months ended 29 February 2020
Op
era
ting e
fficie
ntly
Looking ahead as the new normal unfolds
Letting will be reshaped by low levels of confidence and tight economy
Second half 2020 focus
Support tenants through rental relief
Proactive utilities management and re-prioritise
discretionary expenditure
Unlock procurement and operational expenditure
efficiencies
Anticipated outcome
Secure sustainability of tenants
Mitigate impact of lower revenue
Eliminate non-recurring income
35Redefine Group results for the six months ended 29 February 2020
En
ga
gin
g ta
len
t
35
Engaging talent05Section
Our values are the glue that holds our people together
36Redefine Group results for the six months ended 29 February 2020
En
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Key outcomes for the first half of 2020
The right people in the right place at the right time
Remuneration policy
approved with
overwhelming support
50 learners on the
2020 programme
8 682 hours of
training and
development
Certified as a
Top Employer for 5th
consecutive year
Transformation
across all levels in
progress
Employee
engagement score of
87% - above global
and local benchmark
37Redefine Group results for the six months ended 29 February 2020
En
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Our response to COVID-19
Remaining engaged, motivated and connected through a refreshed people plan
→ A dedicated COVID-19 task team established to implement a coordinated response across the business to ensure
health, safety and wellbeing of all our stakeholders
→ Activated business continuity plans to minimise disruption by initiatives implemented to curb the spread of the virus
→ Our people have all responded positively to the work-from-home challenge
→ A staff communication plan was launched using our values as the driver and emphasising our purpose
→ The focus has now shifted to planning for the eventual return to normalcy
38Redefine Group results for the six months ended 29 February 2020
En
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g ta
len
t
Looking ahead as the new normal unfolds
Our people are our strategic differentiator
Second half 2020 focus Anticipated outcome
Instil a culture of innovation and learning
Accelerate transformation
Refresh organisational structure
Keep staff engaged and motivated
Improve transformation across all levels
Position management for the new normal
39Redefine Group results for the six months ended 29 February 2020
En
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t
Outlook
A fluid game plan to make decisions and adapt to new rules that emerge
Using the COVID-19 crisis as an opportunity
CConnect: Heighten communication and
collaboration with all stakeholders
OOthers: Reassess what sustained value
means to others – all our stakeholders
VValues: Live our values no matter what
the situation
IInnovation: Leverage our purpose as a
tool to stimulate innovation
DDisruption: Focus on what matters most
to deliver on our strategic priorities
Operating in an environment where the knowns are outweighed by evolving unknowns, we are not in a position to provide the market with distributable income guidance
Distributable income retained to bolster liquidity
1 817
1 504
426
175 13
Distributable income retained
Providers of debt
Government and regulatory bodies
Employees
Minority interest holders
Rm
40Redefine Group results for the six months ended 29 February 2020
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40
Supplementary information06Section
41Redefine Group results for the six months ended 29 February 2020
Su
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atio
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Top risks
Uncertainty pertaining to long-term impact of geo-political and socio-economic growth factors
Impact of disruptive technologies
Inability to sustain business operations and services following a disaster or adverse event
Deteriorating public / state infrastructure and poor administrative delivery locally
Financial market volatility
Inability to effectively manage our reputation
Failure to comply with local and international laws and regulations
Inability to be environmentally resilient
Damage to property and security-related threats
Inability to prevent computer fraud and respond to cybersecurity attacks
Long-term impact of failing to transform at an acceptable rate
Increased competition for tenants
Inability to maintain strong ethical and governance culture
Misalignment with international partners (in country)
Elevated top risk Unchanged top risk Reduced exposure
42Redefine Group results for the six months ended 29 February 2020
Su
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Snapshot of our value creation scorecard by key stakeholder
A source of sustained growth in total returns for investors and funders
Outcomes : On track Requires focus Work in progress Introduced in 2020 Not available
Value creation indicator
Distributable income per share down
Reduction of non-recurring distributable income
Deterioration of loan to value ratio to 44.2%
Tangible net asset value per share decrease of 6.4%
Total return to shareholders at -2.8%
Redefine forward yield improvement
Perception score on strategy (consistency on delivery)
Perception score on governance (particularly board independence)
Perception score on disclosure and communication
Moodys credit rating maintained
Inclusion in FTSE4Good sustainability index
Implementation of green funding strategy
Value creation outcome
HY 2020 FY 2019
Active portfolio operating margin ✓X
=
N/A
✓X
X
X
X
✓
=X
==
✓
✓
✓
=
X
X
X
X
✓
✓
✓
N/A
✓ X =
43Redefine Group results for the six months ended 29 February 2020
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Snapshot of our value creation scorecard by key stakeholder
An employer of choice for employees
Value creation indicator
Achieve training and development targets - 8 682 hours recorded
Improvement in communication platforms and use of technology
Transformation progress across all levels
Ensure fair and responsible remuneration
Responsible management of staff complement and staff turnover
55% of vacancies filled through internal appointments
Absorption of learners and youth identified through upliftment programmes into formal employment
Employee engagement maintained
Number of employees mentored through Mentorship Challenge
Change in employee behaviour due to environmental awareness campaigns
Ethics survey score
Value creation outcome
Certified Top Employer status ✓
✓
=
N/A
✓
✓
✓
=✓
X
✓
=
✓X
✓
✓
X
=
N/A
=
✓
N/A
N/A
HY 2020 FY 2019
✓
Outcomes : On track Requires focus Work in progress Introduced in 2020 Not available✓ X =
44Redefine Group results for the six months ended 29 February 2020
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Snapshot of our value creation scorecard by key stakeholder
A differentiated provider of relevant space to tenants
Value creation indicator
Tenant retention on target
Occupancy rate maintained
Footfall in shopping centres maintained
Development to uplift capital and improve spaces
Rollout of solar PV
Address tenant concerns raised through Challenge Convention
Growth in tenant-generated turnover in retail spaces
Increase number of Green Star certifications
Reach tenants through sustainability awareness campaigns
Measures put in place to monitor / address issues around environmental impact caused by tenants
Improved complaint management turnaround times
Improved tenant satisfaction levels
Innovative solutions implemented in idle spaces
Value creation outcome
Growth in total gross lettable area (GLA) space provided X
✓
✓
N/A
✓X
✓
✓
✓
✓
====
✓
✓
✓
✓
X
✓
✓
✓
✓
N/A
N/A
N/A
= N/A
HY 2020 FY 2019
Outcomes : On track Requires focus Work in progress Introduced in 2020 Not available✓ X =
45Redefine Group results for the six months ended 29 February 2020
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Snapshot of our value creation scorecard by key stakeholder
A preferred business partner for brokers and suppliers
Value creation indicator
Procurement spend towards empowering suppliers
Increased share of broker let business
Leverage procurement efficiencies
Enterprise and supplier development of SMMEs
Suppliers agreeing to adhere to Redefine’s code of conduct
Value creation outcome
Level 3 broad-based black economic empowerment (BBBEE) rating ✓
✓
✓
===
✓
✓
✓
✓
N/A
N/A
HY 2020 FY 2019
Outcomes : On track Requires focus Work in progress Introduced in 2020 Not available✓ X =
46Redefine Group results for the six months ended 29 February 2020
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Snapshot of our value creation scorecard by key stakeholder
A responsible community participant
Value creation indicator
Increased stakeholders engaged with the Challenge Convention
Increased mentees matched to mentors under The Mentorship Challenge
Health and safety scores improved
Increased carbon emission savings from solar installations
Local community members employed as suppliers and or as staff of tenants
Achievement of Corporate Social Investment goals
Projects implemented to improve sustainability and the environment in and around our buildings
Development activity to support climate resilience
Implement ESG strategy
Value creation outcome
Contribution to community engagement (through CSI and the second Challenge Convention) =X
=
✓
✓
✓X
=
✓
=
✓
✓
✓
N/A
X
✓
N/A
N/A
N/A
N/A
HY 2020 FY 2019
Outcomes : On track Requires focus Work in progress Introduced in 2020 Not available✓ X =
47Redefine Group results for the six months ended 29 February 2020
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Simplified distributable income statement
RmCents per
Share Change %
HY 2019 distributable income 2 658 49.2
Less HY 2019 non-recurring income (124) (2.3)
HY 2019 recurring distributable income 2 534 46.9
Less: dilution arising from new shares - (0.2)
Less: impact of non-accrual of foreign income (614) (11.3)
1 920 35.4
Organic growth (119) (2.2)
HY 2020 recurring distributable income 1 801 33.2 (6.2%)
Add HY 2020 non-recurring income 16 0.3
HY 2020 distributable income 1 817 33.5 (32.0%)
HY 2020Rm
HY 2019Rm
change%
NOI from investment properties 2 699 2 561 5.4%
Sundry and trading income 21 39 (46.2%)
Total revenue 2 720 2 600 4.6%
Administration costs (114) (133) (14.3%)
Net operating profit 2 606 2 467 5.6%
Net finance charges (745) (484) 53.9%
South African distributable income 1 861 1 983 (6.2%)
International distributable income (44) 675 (106.8%)
Distributable income 1 817 2 658 (31.6%)
48Redefine Group results for the six months ended 29 February 2020
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Funding snapshot
Funding sources
HY 2020
Rbn
FY 2019
Rbn
Bank borrowings 11.9 12.9
Listed bonds and commercial paper 7.7 9.2
Foreign-listed bonds 2.0 2.5
Unlisted bonds 17.9 16.6
Total debt 39.5 41.2
Mark-to-market of cross currency swaps 1.2 1.0
Cash* (1.6) (0.4)
Non-current liabilities held for sale 0.3 -
Net debt 39.4 41.8
Loan-to-value ratio (min required <50%) 44.2% 43.9%
Average term of debt 3.2 years 3.4 years
% of debt secured 68.1% 66.3%
% of asset secured 65.1% 65.3%
Weighted average cost of ZAR debt 8.9% 9.1%
Weighted average cost of FX debt 2.3% 2.3%
Weighted average cost of total debt 6.1% 5.8%
% of ZAR debt hedged 94.0% 92.6%
% of FX debt hedged 78.4% 79.3%
% of total debt hedged 88.7% 87.3%
Average term of hedges 3.0 years 2.9 years
Undrawn facilities (Rbn) 3.5* 5.6
Interest cover ratio (min required >2x) 3.7x 4.3x
*Including cash flow received from sale of ELI on 11 March 2020
49Redefine Group results for the six months ended 29 February 2020
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Active portfolio income analysis
41%
38%
19%
2%
41%
38%
19%
2%
* Properties owned for 12 months in both years
** Net of recoveries
HY 2020
Active portfolio NOI contributionHY 2020
Rm
HY 2019
Rm
Change
%
Active portfolio revenue* 3 128 2 946 6.2%
Active portfolio costs** (531) (488) 8.8%
Property income from active portfolio 2 597 2 458 5.7%
Net operating income from acquired/development properties 39 18 116.7%
Net operating income from disposed properties 63 85 (25.9%)
Net operating income from investment properties 2 699 2 561 5.4%
Active portfolio margin % 83.0% 83.4%
Retail
Industrial
Office
Specialised
HY 2019
50Redefine Group results for the six months ended 29 February 2020
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Debt funding profile
0.8
2.3
8.8 8.5
6.5
4.5
1.6
-
2.2 3.0
5.7
7.2 8.0
2.9 2.0
-0
2
4
6
8
10
2020 2021 2022 2023 2024 2025 2026 2027
Maturity of South African debt
Debt Hedges
0.4 0.7
5.4
3.9
4.9
1.6
- -0.4 0.7
3.2 4.1 3.8
0.9
- -0
2
4
6
2020 2021 2022 2023 2024 2025 2026 2027
Maturity of foreign debt
Debt Hedges
Rbn
47.156.4
60.465.9 68.1
62.2
01020304050607080
FY15 FY16 FY17 FY18 FY19 HY20
Equity headroom for the unsecured lender
1%
1%
1%
1%
2%
2%
3%
4%
4%
5%
5%
5%
8%
10%
13%
17%
18%
NAB and Bank of China
Nedbank
ABSA - UL
Commercial paper
National Bank of Australia
Liberty
Investec
Standard Bank
Exchangable bond
RMB
Standard Bank IOM
Standard Chartered
Standard Bank - UL
Nedbank - UL
Listed Bonds
RMB - UL
ABSA
Sources of debt (%)
Rbn
Rbn
27%
35% 36% 35%
42% 40%
0%
10%
20%
30%
40%
50%
FY15 FY16 FY17 FY18 FY19 HY20
Unsecured debt / unencumbered assets
%
71%
58%
68% 70%66% 68%
60%53%
63%67% 65% 65%
0%
20%
40%
60%
80%
FY15 FY16 FY17 FY18 FY19 HY20
Secured debt / secured assets
Secured debt Secured assets
%
UL = Unlisted Bonds
51Redefine Group results for the six months ended 29 February 2020
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* Net of cash and cash deposits on cross currency swaps
** The over exposure to GBP debt is due to the impairment of RDI
The debt has no recourse to the GBP assets, therefore it does not create liquidity risk but only NAV risk
Currency analysis of property assets and borrowings
HY 2020 FY 2019
Currency
Property assets
RbnDebtRbn
NAV hedge%
Weighted avg cost %
Property assets
RbnDebtRbn
NAV hedge
%Weighted
avg cost %
Net ZAR* 71.3 22.4 31.4% 8.9% 72.8 21.2 29.1% 9.1%
AUD 3.9 2.2 56.4% 3.7% 3.6 1.9 52.0% 4.0%
EUR 10.6 9.9 93.4% 1.6% 15.8 14.0 89.2% 1.7%
GBP** 2.7 4.5 166.7%# 3.0% 2.8 4.1 145.5% 3.0%
USD 0.7 0.4 57.1% 3.9% 0.4 0.6 141.0% 4.5%
Total 89.2 39.4 44.2% 6.1% 95.4 41.8 43.9% 5.8%
Currency Property assetsRbn
DebtRbn
NAV hedge %
EUR 10.6 10.7 101.1%
GBP 2.7 3.2 118.5%
# Post period end, in order to reduce the overexposure to GBP debt, Redefine refinanced it to EUR
debt and settled a portion as follows:
52Redefine Group results for the six months ended 29 February 2020
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Analysis of non-recurring income
HY 2020
Rm
HY 2019
Rm
Chariot trading income - 80
Land trading profit 16 23
EPP withholding tax refund - 21
Total 16 124
53Redefine Group results for the six months ended 29 February 2020
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Active portfolio expenditure analysis
Rm % change
Half-year ended February 2019 488
Net municipal costs increased due to the completed development on properties costs filtering through 15 15.7%
Net electricity costs decreased through a focus on renewable energy (11) 17.4%
Operating costs increased and as a result of developed properties service warranties coming to an end 23 16.3%
Repairs and maintenance increased due to planned preventative maintenance strategies 4 6.9%
Tenant installations costs are deal driven 4 12.3%
Letting commissions are deal driven 0 1.7%
Management fees remain near flat due to the insourcing of certain property management functions 1 2.1%
Bad debts provided for on a specific basis 22 57.6%
Property admin costs decreased due to cost reduction strategies (15) (10.5%)
Half-year ended February 2020 531 8.8%
54Redefine Group results for the six months ended 29 February 2020
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Local active portfolio revenue growth
Active portfolio revenue growth Office Retail Industrial Specialised Total
Active portfolio average rental escalation 7.6% 6.7% 7.5% 9.0% 7.3%
Renewal plus new lets net of expiries -2.5% -2.0% -0.6% 18.5% -1.2%
Growth in rental income 5.1% 4.7% 6.9% 27.5% 6.0%
Growth in other income 0.6% -0.7% 0.6% 3.5% 0.1%
Growth in 2020 property revenue 5.7% 4.0% 7.5% 31.0% 6.2%
Active portfolio NOI growth 6.9% 2.8% 7.6% 23.7% 5.7%
Total vacancy August 2019 % 13.4% 4.8% 1.8% 8.3% 6.0%
Total vacancy February 2020 % 13.6% 5.6% 2.6% 6.3% 6.6%
Vacant properties under refurbishment 1.3% 0.0% 0.5% 0.0% 0.6%
Vacant properties held-for-sale 0.0% 0.0% 0.0% 0.0% 0.0%
Active vacancy February 2020 12.3% 5.6% 2.1% 6.3% 6.0%
Net letting activity post February 2020 0.0% -1.5% 0.0% 1.8% -0.5%
Current vacancy 12.3% 7.1% 2.1% 4.5% 6.5%
55Redefine Group results for the six months ended 29 February 2020
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Realising value from sale of non-core assets
Asset description Proceeds Deal progress
Local property assets R2.9 billion Various properties are in the process of disposal at average yield of 9.1%
Journal
(student accommodation in Australia)R3.8 billion Bidding process completed and transaction in legal drafting stage
Cromwell R0.5 billionResidual investment well be sold on open market once released from Journal
development funding encumbrance
Anticipated proceeds R7.2 billion Anticipated to reduce LTV by 4.3%
56Redefine Group results for the six months ended 29 February 2020
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International distributable income analysis
UK Europe Australia Africa
Total
internationalR000 RDI EPP Chariot
RDF
Europe Cromwell Journal Other
Oando
Wings
Contractual rental income - - - 200 615 - 94 748 - - 296 363
Investment income - - - - 22 564 - 835 - 23 399
Total revenue - - - 200 615 22 564 94 748 835 - 319 762
Operating costs - - - (69 880) - (28 647) - - (98 527)
Administration costs (176) (453) (4 856) (74 692) (95) (19 753) - (1) (100 026)
Net operating profit (176) (453) (4 856) 57 043 22 469 46 348 835 (1) 121 209
Other gains - - - 1 630 - - - - 1 630
Distributable equity income - - - - - - - - -
Net distributable profit before finance costs and taxation (176) (453) (4 856) 58 673 22 469 46 348 835 (1) 122 839
Net interest costs (62 724) (84 513) 11 663 (27 014) (18 347) (21 552) 3 147 (10 622) (209 962)
- Interest income 37 - 12 611 395 26 336 3 147 - 16 552
- Interest expense (62 761) (84 513) (948) (27 409) (18 373) (21 888) - (10 622) (226 514)
Distributable foreign exchange gain (6 828) 4 222 5 426 3 118 3 161 - - 151 9 250
Net distributable profit before taxation (69 728) (80 744) 12 233 34 777 7 283 24 796 3 982 (10 472) (77 873)
Current and withholding taxation (2 640) - - (5 774) (3 857) (504) (1 071) - (13 847)
Net income from operations before NCI share (72 368) (80 744) 12 233 29 003 3 426 24 291 2 911 (10 472) (91 720)
NCI share of distributable income - - - (2 278) - (2 933) - - (5 211)
Net income before distributable adjustments (72 368) (80 744) 12 233 26 725 3 426 21 358 2 911 (10 472) (96 931)
Below the line distributable income adjustments:
- Transaction costs - - - 48 509 - 4 587 - - 53 096
- Accrual for listed security income - - - - (239) - - - (239)
Distributable income (72 368) (80 744) 12 233 75 234 3 187 25 945 2 911 (10 472) (44 074)
57Redefine Group results for the six months ended 29 February 2020
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Income hedging position by currency
56.268.7 72.4 72.8 71.3
16.515.4
18.9 22.6 17.9
18.7 23.6 20.8 21.2 22.4
9.3 11.1 15.7 20.6 17.0
0
20
40
60
80
100
120
Local property assets
Local debt (net of cash)
International property assets
International debt
FY16 FY17 FY18 FY19 HY20
LTV%
RbnAnalysis of property assets and debt
36.5% 41.1% 40.0% 43.9% 44.2%
72.7
28.0
84.1
34.7
91.3
36.5
95.4
41.8
89.2
39.4
2020 2021 2022 2023 2024 2025
EUR
EUR amount (€m) 18.5 24.5 18.0 18.0 12.0 2.5
FEC rate (R: €1) 18.4 19.7 20.9 22.6 23.7 24.6
GBP
GBP amount (£m) 27.4 9.5 3.5 - - -
FEC rate (R: £1) 18.5 20.6 20.7 - - -
AUD
AUD amount (A$m) 2.0 - - - - -
FEC rate (R: A$1) 11.8 - - - - -
58Redefine Group results for the six months ended 29 February 2020
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Reconciliation of cash generated to total distributable income
HY 2020R000
Net cash inflow from operating activities (as per statement of cashflows) 2 135 073
Items in cash flow from operating activities, but not related to distributable income 84 306
Working capital changes 31 210
Increase in trade receivables (182 489)
Decrease in trade payables 213 699
Capital transaction costs 53 096
Non-cash flow items included in distributable income (20 217)
Realised foreign exchange gain 9 250
Amortisation of tenant installations and letting commissions (47 845)
Non-cash flow other (10 299)
Depreciation on property, plant and equipment (10 543)
Share incentive schemes – difference between accrual and payment 39 220
Adjustments to distributable income, not included in IFRS statement of profit and loss 15 861
Trading profit (included in P & L but shown under investing activities) 15 861
Timing differences (384 296)
Equity-accounted investments (net of withholding tax) - difference between dividend received and dividend accrual (no dividends accrued in current period) (520 692)
Taxation - difference between income and withholding taxation accrued not yet paid / received 16 620
Listed investment (Cromwell) – difference between dividend received and dividend accrual (293)
Increase in interest income accrual 41 464
Decrease in interest expense accrual 78 605
Non-controlling interest share of distributable income (13 394)
Distributable income for the year 1 817 333
59Redefine Group results for the six months ended 29 February 2020
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Reconciliation of property assets
Rm
August 2019 property asset platform 95 434
Deployment of capital 1 853
Disposals (5 907)
Impairments (626)
Fair value adjustments (1 731)
Foreign exchange adjustments 496
Net equity accounted profit (368)
Interest raised 88
Interest settled (47)
February 2020 property asset platform 89 192
60Redefine Group results for the six months ended 29 February 2020
Su
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Property portfolio 100.0% R68.5bn
Retail R28.1bn
Office R25.1bn
Industrial R13.7bn
Specialised (excl Respublica) R1.6bn
Respublica 53.4% R1.1bn
Loans receivable and investment in securities*
R1.7bn
R71.3bn
Redefine’s diversified property asset platform
Portfolio valued at R89.2 billion
Direct local property portfolio Direct international properties International listed securities
RDI REIT PLC 29.4% R2.7bn
Cromwell Property Group 2.3% R0.7bn
EPP N.V. 45.4% R8.6bn
R12.0bn
Journal Student Accommodation Fund 90.0% R3.2bn
Oando Wings Development Limited 40.6% R0.7bn
European Logistics platform 46.5% R1.1bn
Chariot Top Group BV 25.0% R0.9bn
R5.9bn
80%
13%
4%3%0%
South Africa
Poland
Australia
UK
Africa
Geographic spread by value
Carried at fair value Equity accounted
*Includes Edcon and Delta
% above represents Redefine's % interest in the asset
61Redefine Group results for the six months ended 29 February 2020
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Local retail portfolio
Market
→ Concern in reduction of disposable income and unemployment on sales and footfall
→ Greater focus on value and essentials
→ Entertainment/restaurants will no longer be a key driver of footfall
→ Online shopping will continue to increase due to lockdown
→ Structural change to convenience shopping
→ Vacancy will increase due to retailers downsizing and liquidations
→ Struggling malls will no longer be relevant and possibly shutdown
→ Retail categories in distress – restaurants, cinemas, travel, luxury and entertainment
→ Operating cost increases due to security and cleaning requirements
Activity
→ Disposed of two non-core properties for R445 million
→ Concluded refurbishments at Kenilworth Centre and Sammy Marks
→ Edcon exposure reduced by 12 286m² to 55 583m² at February 2020
→ Negotiation with retailers on rental relief
→ Half year valuations completed
→ Continued negotiations with tenants to right size and secure tenure
Priorities
→ Occupancy/vacancy management through repurposing of premises
→ Tenant retention and early lease renewal of key retailers
→ Conclude rental relief arrangements with tenants
→ Marketing activities to focus on retailer support
→ COVID-19 compliance - Health and safety will be a key issue
→ Further reduction of space with Edcon
→ Continued focus on underperforming assets
62Redefine Group results for the six months ended 29 February 2020
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Local office portfolio
Market
→ Vacancies will continue to increase with rentals while escalations remain under pressure
→ Densification of space may no longer be a driver for space requirements
→ Tenant sustainability is a key risk
→ Increased vacancy and reduced rental in P and A grade properties will allow for tenant movement from secondary markets
→ Although co-working accommodation may see short term decline, we expect demand to increase medium term
→ Retention of tenants likely to be driven by rental reductions as cost of relocation may be prohibitive
→ Operational costs will be impacted due to regulatory requirements as a result of COVID-19
Activity
→ No acquisitions during the period and unlikely for the foreseeable future
→ Completed refurbishment of 155 West Street at a cost of R168.5 million with current building occupancy of 60%
→ Disposed of one asset to the value of R92.4 million
→ The portfolio has 74 Green Star rated certifications with a further 26 in process of being certified
→ Continued subdivision of space to focus on smaller tenants in selected properties
→ Half year valuations completed
Priorities
→ Tenant retention remains our top priority
→ Mitigate increasing vacancy through lease structuring and rental incentives
→ Conclude rental relief arrangements with tenants in lieu of COVID-19
→ Update asset manager strategies
→ Sustainability initiatives such as water efficiency and waste management
→ Focus on additional services and flexibility of occupancy structures
→ Target businesses with growth opportunities
63Redefine Group results for the six months ended 29 February 2020
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Local industrial portfolio
Market
→ Market rentals remain flat while municipal tariffs continue to rise
→ Pressure from tenants to sign shorter leases
→ Vacancies are expected to rise particularly in secondary nodes impacted by failing municipal infrastructures
→ Continued threat of Eskom load-shedding
→ Potential increase in local manufacturing could impact space requirements
→ SAA liquidation will impact businesses associated with air cargo in the short / medium term
→ Manufacturers and suppliers to non-essential retailers are negatively impacted by the lockdown
Activity
→ Focusing on aesthetic refurbishment projects to keep older properties relevant
→ S&J spec building completed at a cost of R94.7 million
→ New Massmart DC and the Roche laboratory are under development at a cost of R241.4 million at Brackengate 2
→ Infrastructure development at S&J Industrial Estate, Atlantic Hills and Brackengate 2 are in progress at a cost of R468.5 million
→ Half year valuations completed
Priorities
→ Tenant retention remains our top priority
→ Mitigate increasing vacancies through lease structuring and rental incentives for tenants
→ Focus on flexible lease structures to enhance offering to smaller users
→ Continued efforts to dispose of non-core assets and land holdings
→ Focus on product differentiation through the acquisition of High-tech industrial and logistics warehousing within key nodes
→ Concluding negotiations with tenant for rent relief as a result of COVID-19
64Redefine Group results for the six months ended 29 February 2020
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Local portfolio overview
HY 2020 FY 2019
Description Office Retail Industrial Specialised Total Total
Number of properties 106 72 107 15 300 302
Number of tenants 1 125 3 047 407 12 4 591 4 654
Total GLA (m²) (million) 1.2 1.4 1.8 0.0 4.5 4.5
Vacancy (%) active 12.3 5.6 2.1 6.3 6.0 5.1
Vacancy (%) held-for-sale and development 1.3 0.0 0.5 0.0 0.6 0.9
Vacancy (%) total 13.6 5.6 2.6 6.3 6.6 6.0
Asset value (R billion) 25.1 28.1 13.7 2.7 69.6 71.3
Average property value (R million) 237 390 128 178 232 236
Value as % of portfolio 36.1 40.3 19.7 3.8 100.0 100.0
Average gross rent per m² (R) 170.3 171.4 57.8 201.7 122.7 118.4
Weighted average retention rate by GLA 93.3 95.8 97.1 100.0 95.7 93.3
Weighted average retention rate by GMR 94.1 94.9 96.4 100.0 95.0 92.2
Weighted average renewal growth rate (%) -1.5 -2.5 9.4 0.0 2.2 -2.0
Renewal success rate by GLA (includes monthly leases) 78.7 78.1 77.1 0.0 78.0 73.5
Renewal success rate by GLA (excludes monthly leases) 57.0 52.4 72.5 0.0 60.4 64.8
Weighted average inforce lease escalations by GMR (%) 7.6 6.7 7.5 9.0 7.2 7.3
Weighted average unexpired lease term (remaining) by GMR (years) 3.7 3.1 4.6 1.4 3.6 3.7
65Redefine Group results for the six months ended 29 February 2020
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Local portfolio split
DescriptionValuation
(R000)Value
(%)Number of properties
Number of properties (%)
GLA (m²)
GLA (%)
GMR (R000)
GMR (%)
Sector
Office 25 141 795 36% 106 35% 1 237 824 28% 182 084 36%
Retail 28 087 254 40% 72 24% 1 364 501 30% 220 868 43%
Industrial 13 736 208 20% 107 36% 1 829 051 41% 103 040 20%
Specialised 2 662 907 4% 15 5% 29 738 1% 5 620 1%
Grand total 69 628 164 100% 300 100% 4 461 114 100% 511 612 100%
Province
Gauteng 50 837 672 73% 209 70% 3 168 016 71% 369 709 72%
Western Cape 12 037 333 17% 45 15% 651 245 15% 86 616 16%
KwaZulu-Natal 3 093 229 4% 20 7% 286 642 6% 27 085 6%
Other 3 659 928 6% 26 8% 355 221 8% 31 202 6%
Grand total 69 628 164 100% 300 100% 4 461 114 100% 511 612 100%
66Redefine Group results for the six months ended 29 February 2020
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Local sectoral split
36%
40%
20%
4%BY VALUE (%)
28%
30%
41%
1%BY GLA (%)
36%
43%
20%
1%BY GMR (%)
35%
24%
36%
5%BY NUMBER OF PROPERTIES (%)
Office
Retail
Industrial
Specialised
67Redefine Group results for the six months ended 29 February 2020
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Local geographical split
73%
17%
4%6%
BY VALUE (%)
71%
15%
6%
8%BY GLA (%)
72%17%
5%
6%
BY GMR (%)
70%
15%
7%
8%
BY NUMBER OF PROPERTIES (%)
Gauteng
Western Cape
KwaZulu-Natal
Other
68Redefine Group results for the six months ended 29 February 2020
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Local retail sector
37%
35%
16%
6%
6%
BY VALUE (%)
39%
32%
10%
10%
9%BY GLA (%)
5.9%
4.3%
6.7%
7.9%
5.0%
BY ACTIVE VACANCY 5.6%
38%
33%
14%
8%
7%
BY GMR (%)
Community / Small regional
Regional
Super regional
Other
Neighbourhood
69Redefine Group results for the six months ended 29 February 2020
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Local office sector
51%
34%
15%
VALUE BY GRADE (%)
76%
22%
1% 1%VALUE BY LOCATION (%)
4.6%
14.7%
19.9%
Premium A Grade Secondary
BY ACTIVE VACANCY 12.3%
75%
22%
1%2%
GMR BY LOCATION (%)
Premium
A Grade
Secondary
Gauteng
Western Cape
KwaZulu-Natal
Other
70Redefine Group results for the six months ended 29 February 2020
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Local industrial sector
46%
20%
11%
8%
8%
7%1%
BY VALUE (%)
50%
22%
10%
11%
5% 1% 1%BY GLA (%)
2.7%
6.8%
BY ACTIVE VACANCY 2.1%
50%
20%
11%
9%
8% 1% 1%
BY GMR (%)
Hi-tech industrial
Industrial units
Warehousing / Logistics
Light manufacturing
Heavy grade industrial
Vacant land
Retail warehouse
Warehousing / Logistics Industrial units
71Redefine Group results for the six months ended 29 February 2020
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Local vacancy profile
Office
GLA m²
Retail
GLA m²
Industrial
GLA m²
Specialised
GLA m²
Total
GLA m²
Gauteng 127 063 52 238 25 551 1 875 206 727
Western Cape 26 934 806 19 422 0 47 162
KwaZulu-Natal 1 701 2 822 1 657 0 6 180
Other 13 079 20 029 0 0 33 108
Total 168 777 75 895 46 630 1 875 293 177
Vacancy % 13.6 5.6 2.6 6.3 6.6
Active vacancy, excluding held-for-sale or under development 12.3 5.6 2.1 6.3 6.0
Total GLA 1 237 824 1 364 501 1 829 051 29 738 4 461 114
72Redefine Group results for the six months ended 29 February 2020
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Local tenant grading
76%
13%
11%TOTAL (%)
69%
18%
13%
OFFICE (%)
73%
13%
14%RETAIL (%)
81%
11%
8% INDUSTRIAL (%)
Grade A
Grade B
Grade C
73Redefine Group results for the six months ended 29 February 2020
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Local lease expiry profile by GMR
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
Monthly 2020 2021 2022 2023 2024 Beyond2024
Vacancy
Thousands
GMR
Total GMR: 511 612 066
Office Retail Industrial Specialised
Office Retail Industrial Specialised Total
Monthly 14 592 876 13 570 683 1 434 240 4 320 29 602 119
2020 11 121 964 14 771 604 3 618 946 27 619 29 540 133
2021 25 844 676 42 442 748 14 495 818 5 473 843 88 257 085
2022 30 549 207 48 869 244 19 023 827 23 053 98 465 331
2023 18 253 034 33 082 087 9 256 767 - 60 591 888
2024 21 304 573 28 333 787 3 682 019 - 53 320 379
Beyond 2024 60 417 679 39 798 153 51 528 149 91 150 151 835 131
Total GMR 182 084 009 220 868 306 103 039 766 5 619 985 511 612 066
74Redefine Group results for the six months ended 29 February 2020
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Local lease expiry profile by GLA
0
100
200
300
400
500
600
700
800
900
1 000
Monthly 2020 2021 2022 2023 2024 Beyond2024
Vacancy
Thousands
GLA
Total GLA: 4 461 114 m²
Office Retail Industrial Specialised
Office Retail Industrial Specialised Total
Monthly 106 293 70 848 16 917 6 194 064
2020 70 731 58 480 63 376 87 192 674
2021 149 624 209 282 227 625 27 159 613 690
2022 186 192 257 628 289 772 81 733 673
2023 124 948 188 697 167 916 - 481 561
2024 131 649 191 615 65 711 - 388 975
Beyond 2024 299 610 312 056 951 104 530 1 563 300
Vacancy 168 777 75 895 46 630 1 875 293 177
Total GLA 1 237 824 1 364 501 1 829 050 29 738 4 461 114
75Redefine Group results for the six months ended 29 February 2020
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Local top 10 properties and tenants of total portfolio
Property Region
Value
(R000) GLA m² Tenant GLA m² GMR (R)
Centurion Mall Gauteng 4 516 923 119 066 MacSteel 554 987 28 684 408
Alice Lane Gauteng 3 253 800 77 491 Pepkor 223 677 22 658 245
115 West Street Gauteng 1 693 000 41 091 Government 178 321 24 982 645
Blue Route Mall Western Cape 1 687 100 56 145 Shoprite 138 090 13 808 609
Black River Western Cape 1 605 000 71 560 Pick n Pay 102 049 10 487 157
Kenilworth Centre Western Cape 1 495 300 53 433 Woolworths 98 070 8 942 817
East Rand Mall (50% share) Gauteng 1 464 000 34 180 Massmart 88 018 9 515 151
Golden Walk Gauteng 1 411 400 45 208 Edcon 82 357 10 121 713
90 Rivonia Road Gauteng 1 153 000 39 964 Hirt and Carter (SA) 47 718 4 444 253
Stoneridge Centre Gauteng 1 145 757 67 891 Standard Bank 46 805 9 984 845
Total top 10 properties 19 425 280 606 029 Total top 10 tenants 1 560 092 143 629 843
Balance of portfolio 50 202 884 3 855 085 Balance of portfolio 2 901 022 367 982 223
Total portfolio* 69 628 164 4 461 114 Total portfolio 4 461 114 511 612 066
% of total portfolio 27.9% 13.6% % of total portfolio 35.0% 28.1%
* Total portfolio value and GLA (m²) includes properties as presented in the local undeveloped land page
Also included in the portfolio value is the IFRS 16 value of the right-of-use.asset and properties classified as property, plant and equipment
76Redefine Group results for the six months ended 29 February 2020
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Local top 10 retail properties
Property Region
Value
(R000) GLA m² Tenant GLA m² GMR (R)
Centurion Mall Gauteng 4 516 923 119 067 Shoprite 107 942 12 129 256
Blue Route Mall Gauteng 1 687 100 56 145 Pick n Pay 102 049 10 487 157
Kenilworth Centre Western Cape 1 495 300 53 433 Woolworths 70 459 5 649 946
East Rand Mall (50% share) Gauteng 1 464 000 34 180 Edcon 58 937 8 807 056
Golden Walk Gauteng 1 411 400 45 208 Pepkor 58 578 11 623 613
Stoneridge Centre Gauteng 1 145 757 67 891 Massmart 55 663 7 302 708
Centurion Lifestyle Centre Gauteng 1 143 200 62 297 Mr Price 45 671 9 407 061
Matlosana Mall North West 1 061 100 65 000 Foschini 42 673 11 040 569
The Boulders Shopping Centre Gauteng 987 567 48 310 Adeo (SA) 33 580 4 041 568
Maponya Mall (51% share) Gauteng 937 584 36 453 Virgin Active (SA) 30 617 5 311 173
Total top 10 properties 15 849 931 587 984 Total top 10 tenants 606 169 85 800 107
Balance of portfolio 12 237 323 776 517 Balance of portfolio 758 332 135 068 200
Total portfolio* 28 087 254 1 364 501 Total portfolio 1 364 501 220 868 307
% of total portfolio 56.4% 43.1% % of total portfolio 44.4% 38.8%
* Total portfolio value and GLA (m²) includes properties as presented in the local undeveloped land page
Also included in the portfolio value is the IFRS 16 value of the right-of-use.asset and properties classified as property, plant and equipment
77Redefine Group results for the six months ended 29 February 2020
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Local top 10 office properties
Property Region
Value
(R000) GLA m² Tenant GLA m² GMR (R)
Alice Lane Gauteng 3 253 800 77 491 Government 126 237 17 692 430
115 West Street Gauteng 1 693 000 41 091 Alexander Forbes 44 611 12 443 717
Black River Western Cape 1 605 000 71 560 Standard Bank 38 726 7 532 841
90 Rivonia Road Gauteng 1 153 000 39 964 Sanlam 35 049 6 824 570
The Towers Western Cape 1 120 000 59 372 Webber Wentzel 34 883 6 443 259
Wembley Office Park Western Cape 789 100 33 626 Bowman Gilfillan 29 957 7 437 111
Rosebank Link Gauteng 744 320 21 756 Wework (SA) 24 453 3 105 083
Boulevard Office Park Western Cape 725 100 31 533 Amazon Development Centre (SA) 20 130 3 645 066
90 Grayston Drive Gauteng 567 400 19 894 Murray & Roberts 19 309 2 237 146
Riverside Office Park Gauteng 562 700 27 284 Nedbank 18 834 3 781 589
Total top 10 properties 12 213 420 423 571 Total top 10 tenants 392 189 71 142 812
Balance of portfolio 12 928 375 814 253 Balance of portfolio 845 635 110 941 197
Total portfolio* 25 141 795 1 237 824 Total portfolio 1 237 824 182 084 009
% of total portfolio 48.6% 34.2% % of total portfolio 31.7% 39.1%
* Total portfolio value and GLA (m²) includes properties as presented in the local undeveloped land page
Also included in the portfolio value is the IFRS 16 value of the right-of-use.asset and properties classified as property, plant and equipment
78Redefine Group results for the six months ended 29 February 2020
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Local top 10 industrial properties
Property Region
Value
(R000) GLA m² Tenant GLA m² GMR (R)
Pepkor Isando Gauteng 906 200 107 017 MacSteel 554 987 28 684 408
Macsteel Lilianton Boksburg Gauteng 694 700 73 071 Pepkor 165 099 11 034 632
Hirt & Carter Cornubia KwaZulu-Natal 591 920 47 718 Hirt and Carter (SA) 47 718 4 444 253
Macsteel Coil Processing Wadeville Gauteng 407 800 52 886 Isuzu Motors (SA) 38 515 2 077 685
Macsteel VRN Roodekop Gauteng 385 200 57 645 Kintetsu World Express (SA) 35 358 2 123 317
Macsteel Tube & Pipe Usufruct Gauteng 369 100 68 822 Massmart 32 355 2 212 443
Cato Ridge DC KwaZulu-Natal 366 200 50 317 Shoprite 30 148 1 679 352
Macsteel Trading Germiston South Gauteng 332 900 56 495 Robertson & Caine 25 295 1 261 825
Wingfield Park Gauteng 290 200 56 486 Coricraft Group 24 253 1 092 715
GM - COEGA Eastern Cape 267 200 38 515 Government 23 805 2 259 509
Total top 10 properties 4 611 420 608 972 Total top 10 tenants 977 533 56 870 140
Balance of portfolio 9 124 788 1 220 079 Balance of portfolio 851 518 46 169 627
Total portfolio* 13 736 208 1 829 051 Total portfolio 1 829 051 103 039 767
% of total portfolio 33.6% 33.3% % of total portfolio 53.4% 55.2%
* Total portfolio value and GLA (m²) includes properties as presented in the local undeveloped land page
Also included in the portfolio value is the IFRS 16 value of the right-of-use.asset and properties classified as property, plant and equipment
79Redefine Group results for the six months ended 29 February 2020
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Local undeveloped land
Property Region
Value
(R000)
S & J Industrial (90% share) Gauteng 725 430
Brackengate 2 Mainland Western Cape 258 011
Galleria (90% share) Gauteng 190 260
Atlantic Hills (55% share) Western Cape 160 759
Cornubia Ptn 18 KwaZulu-Natal 52 291
BGM 5 - Mass Mart (50.1% share) Western Cape 41 733
Boulevard Annex Western Cape 39 728
Golf Air Park III Western Cape 27 300
Masingita Mall (40% share) Gauteng 24 103
Wonderboom Junction Phase 2 Gauteng 24 047
Total undeveloped land 1 543 662
Balance of undeveloped land 31 758
Total undeveloped land 1 575 420
% of total undeveloped land 98.0%
80Redefine Group results for the six months ended 29 February 2020
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Local specialised properties
Property Region
Value
(R000) GLA m²
Bedford Gardens Hospital Gauteng 361 000 12 817
Southern Sun OR Tambo International Airport Gauteng 22 820 14 153
Total specialised properties 383 820 26 970
Balance of portfolio 2 279 087 2 768
Total specialised portfolio* 2 662 907 29 738
% of total specialised portfolio 14.4% 90.7%
*Total portfolio value and GLA (m²) includes properties presented in the student accommodation page as well as properties classified and property, plant and equipment and properties held for trading
81Redefine Group results for the six months ended 29 February 2020
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* As at 29 February 2020, the student accommodation portfolio had an average occupancy rate of 96.7% (FY19 83.7%)
** Held for future development applied to 55 Empire Road
Local student accommodation
Property Region
Value
(R000) Beds
Hatfield Square Gauteng 681 764 2 331
Princeton House Gauteng 393 010 1 846
Roscommon House Western Cape 232 292 582
Saratoga Village Gauteng 210 937 1 077
West City Gauteng 139 790 1 134
Yale Village Gauteng 110 944 330
Lincoln House Free State 103 550 469
Urban Nest Gauteng 58 800 300
The Fields Gauteng 55 160 308
55 Empire Road** Gauteng 41 125 0
Paton House KwaZulu-Natal 13 768 0
Total* 2 041 140 8 377
82Redefine Group results for the six months ended 29 February 2020
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* Land sales do not have GLA or yields
** The proceeds on disposal of the UK assets are based on an exchange rate of R18.6/GBP. The proceeds on disposal of the Polish assets are based on an exchange rate of R16.3/EUR
Disposals – Investment property
Property Province
Date
of transfer GLA (m²)
Proceeds
(R000) Yield (%)
Retail 35 986 445 307 10.8
Ermelo Mall Other 29-Nov-19 19 501 253 441 10.8
Alberton Mall Gauteng 29-Nov-19 16 485 191 866 10.8
Office 11 082 92 382 -
22 Fredman Drive Gauteng 19-Dec-19 11 082 92 382 -
Land* - 67 001 -
Wilgespruit (Ext 62) Gauteng 25-Sep-19 - 6 000 -
Centurion Land Gauteng 13-Nov-19 - 11 769 -
Mainland Phase 2 Western Cape 19-Dec-19 - 1 037 -
S&J Land (90%) Gauteng 27-Nov-19 - 48 195 -
International** 731 134 6 705 929 6.9
UK townhouses UK 20-Dec-19 - 10 093 -
Stryków Poland 31-Jan-20 77 659 801 960 6.1
European Logistics Investment B.V. Poland 29-Feb-20 653 475 5 893 876 7.0
Grand total 778 202 7 310 619 7.1
83Redefine Group results for the six months ended 29 February 2020
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Disposals – Held for trading
Property Province
Date
of transfer
Proceeds
(R000)
Specialised 46 806
Park Central Gauteng Various 46 806
Land 55 050
Stikland Western Cape Various 2 914
Erf, Atlantic Hills (55% share) Western Cape Various 52 136
Grand total 101 856
84Redefine Group results for the six months ended 29 February 2020
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* Purchase price includes the cost of land and relates to 100% of the cost. Numbers as shown relate to Redefine's share in the joint ventures. Redefine's share is 47.5% of this cost
The purchase prices of the Polish assets are based on an exchange rate of R16.3/EUR
Acquisitions
Property Country Sector
Date
of transfer GLA (m²)
Purchase price
(R000) Yield (%)
International
Toruń* Poland Land 23-Sep-19 16 902 25 068 6.6
Ruda* Poland Land 23-Sep-19 32 949 28 636 6.6
Grand total 49 851 53 704 6.6
85Redefine Group results for the six months ended 29 February 2020
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* Land sales do not have GLA or yields
Non-current assets held for sale
Property Province Sector GLA (m²)
Proceeds
(R000) Yield (%)
Industrial 7 590 31 604 9.8
6 Kruger Gauteng Industrial 7 590 31 604 9.8
Land* - 42 000 -
Kyalami Ridge land Gauteng Land - 42 000 -
Oando Wings - 402 518 -
Non-current assets held for sale - 669 847 -
Non-current liabilities held for sale - (267 329) -
7 590 476 122 9.8
86Redefine Group results for the six months ended 29 February 2020
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Local new developments completed
Property Province GLA (m²)
Development
cost (R000)
Initial yield
(%)
Completion
date
Industrial* 18 568 94 656 9.3
S & J -Spec Jupiter (90% share) Western Cape 18 568 94 656 9.3 Oct-19
94 656 9.3
* Development cost exclude the cost of land
87Redefine Group results for the six months ended 29 February 2020
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Local current new developments in progress
Property Province GLA (m²)
Projected dev.
cost (R000)
Initial yield
(%)
Projected
completion date
Still to spend
(R000)
Industrial* 52 313 241 351 9.4 205 586
Brackengate MassMart (50.1% share) Western Cape 52 313 168 326 9.3 Oct-20 133 141
Roche at Brackengate 2 (50.1% share) Western Cape - 73 025 9.5 Nov-20 72 445
Retail* 267 5 500 11.0 4 948
Ottery Burger King DT Western Cape 267 5 500 11.0 May-20 4 948
Grand total 52 580 246 851 9.4 210 534
* Development cost exclude the cost of land
88Redefine Group results for the six months ended 29 February 2020
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Local refurbishments
Refurbishments completed Province
Refurbishment cost
(R000) Completion date
Office 207 976
155 West* Gauteng 168 461 Oct-19
Knowledge Park* Western Cape 39 515 Dec-19
Retail 47 500
Sammy Marks Phase 3* Gauteng 15 423 Mar-20
Kenilworth Centre* Western Cape 32 077 Feb-20
255 476
Refurbishments in progress Province
Projected
cost (R000)
Projected
completion date
Still to spend
(R000)
Office
Black River Park* Western Cape 2 014 Jun-20 2 014
Towers Phase 1* Western Cape 27 137 Jun-20 25 422
29 151 27 436
* Refurbishment costs exclude the cost of land
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Local new developments/refurbishments
Local new developments future committed pipeline Province GLA (m²)Projected cost
(R000)
Initial yield
(%)Projected start date
Industrial* 20 651 122 952 9.2
Sparepro S & J (90% share) Gauteng 20 651 109 452 9.2 Apr-20
Infrastructure ext 28 Gauteng - 13 500 - Apr-20
Retail* 10 059 172 580 10.0
Little Falls Phase 2 Gauteng 10 059 172 580 10.0 Nov-20
Local new refurbishments future committed pipeline ProvinceProjected cost
(R000)
Initial yield
(%)Projected start date
Retail* 170 108 8.8
Centurion Lifestyle Centre Gauteng 68 146 3.0 Apr-20
Kyalami Corner Dis-Chem extension Gauteng 21 533 - May-20
Centurion Mall food experience Gauteng 80 429 13.8 Aug-20
Industrial* 10 156 -
Wingfield Park upgrades Gauteng 10 156 - May-20
Province
Number
of bedsProjected cost
(R000)
Initial yield
(%)Projected start date
Student accommodation* 53 550 10.6
Paton House Kwazulu-Natal 538 53 550 10.6 Oct-20
Province
Number
of bedsProjected cost
(R000)
Initial yield
(%)Projected start date
Student accommodation 73 955 9.7
Yale Village Phase 2* Gauteng 196 28 855 8.9 Jul-20
55 Empire Road* Gauteng 462 45 100 10.2 Feb-21* Development cost exclude the cost of land
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Local infrastructure projects
Infrastructure projects completed ProvinceTotal dev. cost
(R000) Completion date
Industrial
S & J Phase 2 (90% share)* Gauteng 18 974 Dec-19
Grand total 18 974
Infrastructure projects in progress ProvinceTotal dev. cost
(R000)Expected
completion dateStill to spend
(R000)
Industrial*
S & J Phase 1 (90% share) Gauteng 135 576 May-20 31 500
Brackengate (50.1% share) Western Cape 178 962 Jun-20 5 375
Atlantic Hills (55% share) Western Cape 153 943 Apr-20 53 375
Grand total 468 481 90 250
* Development cost exclude the cost of land
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United Kingdom
Redefine’s interests → RDI REIT 29.4%
Platform profile → 28% exposure to retail, 24% to offices, 28% to hotels and 19% to industrial assets
Carrying value → R2.7 billion
See through value of assets → R8.3 billion
See through LTV → 110.1% (2019 : 109.5%)
Redefine activity in firsthalf of 2020
→ Following the large drop in the RDI share price, several opportunistic approaches have been received
→ While the share price is at a deep discount to NAV, it is unlikely that any realistic offers will be made
→ The focus will now shift to securing the future before any further approaches or strategic options are entertained
Redefine’s strategy → Some options may require Redefine to remain invested in the medium-term without committing further equity to RDI or a
sale of the stake
→ Options, if realistic and capable of conclusion, will be considered for Redefine to realise value
→ Funding arrangements put in place to allow for EUR117.2 million exchangeable bond early redemption
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Australia
Redefine’s interests → Journal 90%
→ Cromwell 2.3%
Platform profile → 12% exposure to offices, 6% to retail assets and 82% to student accommodation
Carrying value → R3.9 billion
See through value of assets → R4.5 billion
See through LTV → 63.3% (2019: 29.8%)
Redefine activity in firsthalf of 2020
→ A competitive bidding process run by JLL, which drew strong response, has concluded
→ Final negotiations on the disposal of the Australian student accommodation portfolio are underway
→ Conclusion of the sale agreement is anticipated by June
Redefine’s strategy → Establish Uni Place as the premier student accommodation facility in Melbourne
→ Central development to be completed by mid-June
→ Disposal of Journal would release remaining Cromwell units for disposal
→ The disposals will greatly support our strategic priority to strengthen our balance sheet
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Australia | continued
Impact of COVID-19 → The government has now closed the borders to all inbound travel
→ The universities are physically closed but facilitating on-line learning. In light of the significant change in circumstances
some students have not been able to arrive in Australia while others have sought to return home
Key operational highlights Uni Place semester one
→ Due to the aforementioned travel ban and changes in university operating settings occupancy has dropped
→ Taking into account non arrivals and processed cancelations/deferrals, we are currently projecting revenue equivalent to
75% occupancy for semester one, which is partly elevated by 12 month bookings from calendar year 2019 running into
calendar year 2020
Central semester two
→ The unknown duration of the travel ban means that leasing for semester two will be extremely challenging
→ The current strategy is to direct the limited inquiry toward Uni Place, on the grounds of mitigating costs, by not opening a
second building (reducing staff, utility etc)
→ In the event that onshore demand for Uni Place exceeds supply, bookings for Central will be opened
Development → The construction of Central is due to be completed by mid-June as long as there is no shutdown of building sites. The
project cost is A$110.0 million, with costs to complete of A$20.7 million
94Redefine Group results for the six months ended 29 February 2020
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Poland
Redefine’s interests → EPP 45.4%
→ Chariot Top Group 25%
→ European Logistics 46.5%
Platform profile → 81% exposure to retail, 9% to office and 10% logistics assets
Carrying value → R10.6 billion
See through value of assets → R23.4 billion
See through LTV → 93.2% (2019 : 89.4%)
Redefine activity in firsthalf of 2020
EPP
→ No change in Redefine’s shareholding in EPP is anticipated in the medium term
European Logistics
→ On 23 December 2019, Redefine entered into a share sale agreement with Madison and Griffin for the disposal of a 46.5%
and 2% interest respectively in the Polish logistics portfolio held through European Logistics Investment B.V (“ELI”)
→ Before the sale, Redefine Europe B.V (“Redefine Europe”), a wholly owned subsidiary of Redefine, held 95% and Griffin 5%
of the shares in ELI
→ In terms of the agreement, Madison and Griffin agreed to a total equity commitment of EUR150.0 million and
EUR13.4 million respectively over the next five years
→ Following the conclusion of the transaction, Redefine holds a 46.5% equity interest in ELI
→ Net after the settlement of the purchase price (comprising equity and an earn out applicable to developments in progress),
Madison’s equity commitment is EUR66.3 million with Griffin’s commitment at EUR4.9 million
→ Redefine agreed to match the equity commitment of Madison and will reinvest EUR66.3 million in the platform funded from
the proceeds of the sale of 48.5% of ELI
→ With the exclusivity arrangement with Panattoni still in place, the equity will be invested in new development projects across
Poland
→ Cash flow for the transaction occurred 11 March 2020
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Poland | continued
Redefine’s strategy EPP
→ The focus in the short term is for EPP is to get through the crisis period with enough liquidity to maintain operational
functionality
→ Medium term focus is to continue with optimising asset management opportunities within the portfolio as well as de-
leveraging the company to a LTV level below 45%
→ Redefine as a significant shareholder will continue to provide strategic support to the EPP management team
Chariot Top Group
→ The trading opportunity will be unwound as and when deal flow resumes in the Polish market
European Logistics
The focus for the immediate future, apart from dealing with the current crisis will be to:
→ Complete the developments in progress in order to receive the earn out fee from Madison
→ Complete the developments currently under construction as well as let the vacancies
→ Secure pre letting on current land holdings for further expansion
→ Continue identifying market opportunities to invest and grow the logistics portfolio in Poland through development activity
Market Overview
European Logistics
→ For the 2019 calendar year, the demand for logistic space in Poland, for the third consecutive year, reached nearly
4.0 million m², of which 67% came from new business
→ Poland's five main logistics hubs accounted for 80% of the total demand
→ The highest lease activity occurred in the Warsaw region (1.3 million m²), followed by Upper Silesia (600 000m²) and then
Central Poland and Wroclaw (590 000m² each)
→ Despite the COVID-19 outbreak, threatening the disruption of global supply chains and business operations, the logistics
industry is maintaining a generally positive outlook
→ Logistics is expected to prove more resilient than other real estate classes in the longer term
→ A positive demand for space will be generated through rising inventory levels and the acceleration of e-commerce
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Poland | continued
European Logistics
Impact of COVID-19 on
operations
→ To contain the spread of the COVID-19 virus, the Polish government published a decree in March 2020, declaring a nationwide state of epidemy
→ Pursuant to the decree, business activity has been restricted and any retail trade, except for those that sell groceries, toiletries, medical supplies and services has been prohibited
→ The decree does not enforce any closure of logistics parks, offices or warehouses and tenants retain access to their premises→ Most logistics tenants are still operational→ Tenants negatively impacted by the decree, who have decided to close their operations, are mainly suppliers to non-essential
retailers (i.e. furniture) and industries related to automotive manufacturing→ These closures are voluntary and each request for relief is dealt with on a case-by-case basis→ On 29 April a phased plan to open the economy from 4 May was released
Key operational highlights → Conclusion of 48.5% share sale to Madison and Griffin→ Completion of Strykow sale→ Reduction in vacancy to 9.9%→ Completion of Warsaw Logistics development (25 510m² GLA)→ Approval of three new developments (90 110m² GLA)→ New land acquisition in Czeladz approved in February 2020 and sale was executed in March 2020→ Limited negative impact on cash flow from COVID-19 to date→ As at 29 February 2020, the total GLA for the operational portfolio, was 392 384m² (444 114m² at 31 August 2019)→ The reduction in the GLA is the result of the Strykow sale in January 2020→ The vacancy in the operational portfolio decreased from 71 025m² (16.5%) as at 31 August 2019 to 38 839m² (9.9%) as at 29
February 2020 mainly due to the disposal of the Strykow building with 22 213m² vacant and the letting to NVH (16 235m²) in Bielsko
→ The largest vacancy in the portfolio is 12 566m² at Lodz Business Center II and III where Brand BQ vacated in October 2019→ During the period, good leasing activity was recorded with 18 805m² of lease renewals at an average rent of EUR3.86 per m²
and 18 629m² of new lettings at an average rent of EUR3.78 per m²→ No rental growth was recorded on lease renewals and new lettings→ Included in the operational portfolio is the first phase of Warsaw Logistics (25 510m² GLA) which was completed in the first
quarter of FY2020 and is fully let→ The development cost is EUR13.6 million with an initial yield of 6.8%
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Poland | continued
European Logistics
Acquisitions → In March 2020, concluded the acquisition of 8.7ha of well-located, undeveloped land in Czeladz, located in the Upper Silesia region (the second largest industrial market in Poland), for an amount of EUR3.4 million
→ The multi-phase development of logistic warehousing will have a total GLA of 36 511m²→ Phase 1 of the development will consist of approximately 9 200m² GLA→ The land is still to be transferred and the development of the warehouses will only start once letting targets are met
Developments Under construction→ As at 29 February 2020, Torun (16 902m² and 67% let) and the small building at Opole (9 074m² and 88% let) are
substantially complete→ Other projects still under construction, are the second phase of Warsaw Logistics (47 961m²) and the larger building at
Opole (15 261m²) → The projects, with a total development cost (including land) of EUR73.7 million, are expected to yield an initial return of 6.6%
and are on program for completion in FY 2020→ The second phase of the Warsaw Logistics is also fully let, which is indicative of the strong letting market in Warsaw→ To date, no tenant has been secured for the second building at Opole
New development projects→ In March 2020, three new projects approved - all being developed on existing landholdings→ The projects, all started in March 2020, are:
Disposals → The sale of Strykow was concluded on 31 January 2020→ Redefine (95%) and Griffin (5%) retained the right to develop the last phase of the Strykow development (22 300m²) over
the next two years→ The rental guarantee, provided by Redefine Europe and Griffin on the vacant space, is for a maximum period of two years
and can reduce over time with new lettings
Project
GLA
(m²)
Dev cost
(EUR ’000) Yield Pre-letting
Anticipated
completion date
Bielsko Biala 2 44 148 29 208 7.3% 40.4% Jul/Aug 2020
Ruda Slaska 1 32 949 17 967 6.2% 63.6% July 2020
Gdansk 1 13 013 7 372 6.3% 27.4% July 2020
Total 90 110 54 547
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International new developments
Completed during the year Country GLA (m²)Development
cost (EUR’m)
Development
cost (Rm)Initial yield (%)
Industrial
Warszawa Phase II Poland 25 510 13.6 220.5 6.8
25 510 13.6 220.5 6.8
In progress Country GLA (m²)Development
cost (EUR’m)
Development
cost (Rm)
Initial yield
(%)
Completion
date
Still to spend
(EUR’m)
Still to spend
(Rm)
IndustrialWarszawa Phase I Poland 47 961 31.5 541.5 6.5 Sep-20 4.9 84.5
Opole Phase I Poland 24 335 18.4 316.8 6.8 Oct-20 1.9 33.0
Torun Building B Poland 16 902 12.4 213.2 6.6 Mar-20 1.6 28.2
89 198 62.3 1 071.5 6.6 8.4 145.7
CountryNumber
of beds
Development
cost (AUD’m)
Development
cost (Rm)
Initial yield
(%)
Completion
date
Still to spend
(AUD’m)
Still to spend
(Rm)
Student accommodation
Swanston Street Australia 587 110.0 1 121.0 9.2 Jun-20 20.7 210.7
Future committed
timelineCountry
GLA
(m²)
Development
cost (EUR’m)
Development
cost (Rm)
Initial yield
(%)
Completion
date
Still to spend
(EUR’m)
Still to spend
(Rm)
Industrial
Gdańsk Phase II Poland 13 013 7.4 127.2 6.3 Jul-20 7.4 127.2
Ruda Ślaska Phase I Poland 32 949 18.0 308.9 6.2 Jul-20 18.0 308.9
Bielsko-Biała Phase II Poland 44 148 29.2 502.1 7.3 Jul-20 22.7 390.4
90 110 54.6 938.2 6.6 48.1 826.5
99Redefine Group results for the six months ended 29 February 2020
Disclaimer
This presentation may include forward-looking statements which statements are not based on historical information, but rather premised on certain assumptions, risks, estimates
and/or uncertainties (“risks and uncertainties”), which are taken into consideration as at date of this presentation. All figures presented are as at 29 February 2020.
Should these risks and uncertainties prove inaccurate, or should unknown risks and uncertainties affecting Redefine’s business materialise, the actual results may differ materially
from Redefine’s expectations. As a result of risks and uncertainties falling outside of our control, Redefine is not able to guarantee that any forward-looking statements will
materialise. Attendees are accordingly cautioned in this regard and in respect of reliance placed on forward-looking statements as predictors of future events.
Redefine assumes no obligation and disclaims any intention to update or revise any forward-looking statements (even in the event of new information or change in risks and
uncertainties), save to the extent required by the JSE.