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As vacant space in South Africa's office buildings and malls continues to grow, Redefine [JSE: RDF], one of the largest property owners in the country, has seen lower rents for renewed leases.
The group saw an average rental decrease of 2% for its renewed leases over the past year, from an average rent hike of 1.5% the previous year. Its vacancy rate increased to 5.1% from 4.5%, while net arrears amounted to R87 million – or almost 11% - of gross monthly rentals. Revenue rose 4.1% to R8.8bn, while headline earnings fell by almost 43% for the year to end-August.
Redefine blamed the weak economy and uncertainty about everything from “contentious reforms, including land expropriation without compensation, the national health insurance, prescribed assets and the sale of ill-functioning state entities” for an "an environment of costly capital and a leasing environment reshaped by low levels of confidence".
“The trigger for the upturn will begin with restoring confidence – it is not going to be through the conventional means of global, monetary or fiscal policy, it must be political," the company said in a statement.
"Grey swan events are seen as unlikely but new risks no doubt will emerge. We brace ourselves to expect the unexpected and to continue future proofing ourselves without being distracted by waiting in anticipation of the grey swan to appear," it added.
A grey swan is a term used to describe an event which is considered unlikely, but which would be very significant if it did occur.
Redefine owns properties worth more than R95 billion, including Maponya Mall, East Rand Mall, and the Blue Route Mall, as well as office buildings on 90 Rivonia Road, Alice Lane, Rosebank Link and 90 Graystone Drive. It also has properties in Poland, the UK and Australia.
Its distribution for the full year was 101c, which is 4% higher than last year.
