Redefine's Poland push and a lesson in active asset management
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Redefine Properties is targeting a 40% capital allocation to Poland while balancing South African retail, industrial and office assets, arguing that active asset management is the principal source of value creation.
Redefine Properties is looking to increase its relative exposure to Poland, intending to allocate 40 per cent of capital to the country, a shift from the capital allocation approach of the past three years, according to its Capital Markets' Day presentation.
Over 12 months the Redefine share price is up 22 per cent, or 32 per cent on a total return basis including dividends. The group argues that active asset management is the principal source of value creation in property, with its presentation declaring that "buildings do not create value, people do".
The average income yield on assets in Poland is only 150 basis points lower than in South Africa (6.3 per cent versus 7.8 per cent), which the group says offers a better risk-reward trade-off at the moment. The international contribution to distributable income has already moved up from 25 per cent to 28 per cent over the past three years.
In South Africa, Redefine describes retail as its strongest operating sector, while the domestic industrial market offers the best growth in positive reversions because suitable sites for new warehouses and logistics nodes remain scarce. The local office sector remains difficult outside Cape Town, where the BPO sector underpins demand, but vacancies are expected to improve to single digits by FY27, with only 5.1 per cent of P-grade offices sitting vacant against 28.1 per cent of secondary offices.
P-grade offices in Gauteng are identified as a capital allocation priority, with Redefine willing to assume a three-year stabilisation period in its model, while rural and township retail assets are also flagged as priorities, though these have become hard to find at attractive prices due to the volume of capital chasing such opportunities.