Redefine Properties: More work to be done on LTV amid COVID-19 headwinds

Redefine Properties, a South African property group, has faced significant challenges during the global COVID-19 pandemic regarding its loan-to-value ratio. In a recent interview with CNBC Africa, Redefine Properties CEO, Andrew Konig, discussed the impact of the pandemic on the company's operations and strategies for the future. Konig highlighted the difficulties faced by the property sector due to COVID-19, emphasizing the relief provided to tenants and the resulting burden on the company's finances. Redefine's top priority in the previous year was addressing the group's loan-to-value ratio, aiming for a sub-40 per cent ratio by August of the following year. However, the destructive impact of the pandemic has led to more work needing to be done to achieve this goal. Konig pointed out that despite successful initiatives to reduce the loan-to-value ratio, the value distractions on their asset base caused setbacks, leading to plans for further remediation in 2021. The company recorded a significant decline in distributable income, reflecting the various challenges faced during the pandemic. These challenges included tenant relief, additional credit loss provisions, and reduced dividends from offshore investments. The impact of COVID-19 has been felt across the board, with every sector of the company experiencing the effects of the pandemic. The discussion also touched on Redefine Properties' strategic move to a new location in Rosebank, citing the area's desirability and better letting prospects compared to their previous location in Sandton. This move aims to create cost savings for the company over the next five years. The conversation shifted to the rental market, where Konig highlighted the challenges faced with vacancies and renegotiating rental agreements due to changes in space requirements and flexible working arrangements. Negotiations with tenants have been challenging but essential for maintaining cash flow and sustainable business operations. Redefine Properties operates in the retail, office, and industrial sectors, with plans to reconfigure their portfolio going forward. Konig emphasized the need for adaptation and acceleration in response to the changing landscape brought about by the pandemic. The company aims to diversify geographically and focus on sectors with growth potential, such as logistics. Redefine Properties seeks to position itself as a significant presence in various geographies and capitalize on opportunities for growth in the coming years.