Redefine targets lower office vacancies as it reshapes R101bn portfolio

Redefine Properties is repositioning its R101.2bn portfolio towards sectors with stronger long-term demand, recycling capital from weaker assets while selectively investing to strengthen income growth and returns.

The strategy forms part of a broader effort to improve portfolio quality and support growth in distributable income per share (DIPS) of 6.5%-7%, broadly in line with the listed property sector average.

As it recycles capital from weaker assets, the group is taking a more deliberate approach to offices, backing properties it believes are well placed to capture the sector’s recovery.

The group is targeting an office vacancy rate of below 10% as it seeks to strengthen occupancy and extract greater value from its existing portfolio .

Its pipeline includes the R65.5m redevelopment of Hertford Office Park and the R10.5m refurbishment of 3 & 5 Sturdee in Rosebank into standard office space. At Black River Office Park, it is refurbishing the Media Building, adding 385m² of gross lettable area, with completion expected in October.

After disposing of De Beers House in Rosebank for R48m, Rosebank Corner for R78.4m and Grayston Ridge for R75m, the group has also sold five other properties as part of its portfolio recycling strategy.

Speaking at the group’s Capital Markets Day on Wednesday, CEO Andrew König said the proceeds from assets that no longer fit the group’s strategy were being redirected towards areas with more durable demand, including retail, logistics and energy infrastructure.

“In South Africa, our strategy is increasingly focused on convenience retail, township and rural retail centres, industrial and logistics assets, and energy infrastructure — sectors where we see resilient demand and opportunities to drive sustainable, long-term income growth,” he said.

In 2024, the group restructured its R27bn debt, easing pressure from a complex balance sheet that had weighed heavily on the business while broadening competition among its funders.

Redefine retail asset manager Nashil Chotoki said grocery and apparel categories continued to underpin turnover growth, while restaurants were benefiting from the recovery of large-format centres and growing demand for experiential retail.

Chotoki said retailers were continuing to invest in physical stores despite the growth of e-commerce, particularly in grocery, pharmacy and value retail formats, reinforcing the group’s conviction in well-positioned brick-and-mortar assets.

“The group is planning about 18,700m² of store optimisation initiatives during 2027, while 28,900m² of grocer upgrades are scheduled across the portfolio as part of a broader programme to improve tenant performance, enhance customer experience and support long-term rental growth,” he said.

The industrial portfolio is also benefiting from sustained demand for well-located logistics space.