Our opinion on the current state of REDEFINE(RDF)Redefine (RDF) is the second-largest real estate investment trust (REIT) in South Africa (after Growthpoint), with assets worth R72,9 billion against a market capitalization of R25,1 billion. The company primarily holds industrial and office properties, with investments in Poland, the UK, and Australia.
In our view, this is a massive REIT with significant exposure to South African office space. It is heavily impacted by developments in the South African economy, local political risk, and especially the elections. However, it remains stable, well-managed, and is currently trading well below the book value of its assets. Redefine previously announced that it would look to acquire a controlling interest in the Polish property company, EPP.
In its results for the year to 31st August 2024, the company reported revenue up 7,5% and headline earnings per share (HEPS) up 57,3%. The company stated, "Coming off a prolonged trough, we can look forward to an upward property cycle in FY25, which will be gradual as the lingering effects of elevated interest rates are worked off."
In a pre-close update on 25th February 2025, the company reported an occupancy rate of 94,2% and tenant retention of 96,6%.
Technically, Redefine drifted down from its high of 1,250c in April 2015 to levels around 600c before falling sharply to 159c with the advent of the pandemic. It has since recovered but has been moving sideways and downwards since November 2021. It trades at about 57% of its net asset value (NAV).
To us, the share still looks oversold and cheap, but its loan-to-value (LTV) ratio is high, which adds some risk.
