Debt strategy Archives

Vukile concludes oversubscribed R500 million bond issuance at record-low pricing

Vukile Property Fund (JSE: VKE) has successfully concluded the issuance of R500 million in senior unsecured corporate bonds across three- and seven-year maturities, achieving market-leading pricing. The offering was met with overwhelming demand, attracting more than R3 billion in bids — over six times the target issue size.

The three-year tranche of R214 million priced at 102 basis points (bps) and the seven-year tranche of R286 million priced at 135bps — both tighter than initial price guidance. The weighted average margin of 121bps represents a substantial improvement over existing debt maturing in Vukile’s 2026 financial year, which will be re-paid, lowering Vukile’s cost of capital.

Laurence Rapp, Chief Executive Officer of Vukile, comments, “We are pleased with the strong demand and favourable pricing received. The substantial support for the auction demonstrates the market’s endorsement of Vukile’s disciplined approach to capital allocation, our high-quality assets and our long-term investment strategy.”

Absa Bank Limited, through its Corporate and Investment Banking division, acted as sole lead arranger.

Marcus Veller, Principal, Debt Capital Markets of Absa notes, “The keen investor interest, with over 21 institutions participating in the auction, demonstrates Vukile’s strong position as a meaningful and regular DCM issuer. Vukile’s track record of financial performance and a supportive market culminated in an excellent auction and issuance outcome.”

Maurice Shapiro, Group Head of Treasury at Vukile, adds, “The record low pricing of this bond issuance marks a significant milestone in our debt capital markets strategy. The favourable outcome reduces Vukile average cost of debt and extends our maturity profile, reinforcing balance sheet strength and flexibility.”

In July 2025, GCR Ratings upgraded Vukile’s national scale long-term issuer credit rating to AA+(ZA) from AA(ZA) and affirmed its short-term rating at A1+(ZA), with a stable outlook. GCR highlighted that “Vukile’s property performance remains a key rating strength,” citing its resilient portfolio as a consistent outperformer in the broader property sector.

Vukile is a specialist retail REIT with a high-quality, blue-chip-tenanted portfolio valued at approximately R50 billion, operating across South Africa, as well as Spain and Portugal through its 99.6% owned Spanish subsidiary, Castellana Properties. Vukile’s consumer-centric focus on defensive, everyday retail in both South Africa and Iberia has proven resilient and strategically accretive, driving value creation for stakeholders.

Redefine strengthens position in uncertain market, eyes future upside

Johannesburg, 12 May 2025 – Redefine Properties, a leading South African Real Estate Investment Trust (REIT) with a diversified portfolio locally and in Poland, has reported solid financial results for the six months ended February 2025. The company’s core operating segments delivered organic growth, underscoring the efficiency, durability and quality of its asset platform.

Profitability continues to improve across all regions, driven by improved occupancy levels and disciplined cost management. The group-wide net operating profit margin rose to 76.9%, up from 76.5% in the comparable period, with South Africa at 79.1% and EPP core (Poland) at 77.2%. EPP’s core occupancy reached a near-full 99.2%, while local occupancy also showed steady improvement, signalling the resilience of the leasing market despite ongoing rental pressures – particularly in the local office sector.

Reflecting on the past five years, CEO Andrew König described the period as “a game of snakes and ladders,” shaped by successive global shocks – from COVID-19 to energy crises, warring conflicts, interest rate hikes, and more recently trade tensions. These disruptions have heightened uncertainty, undermining capital market stability and unsettling business confidence that property cycles rely on.

“Despite this, Redefine continues to emerge stronger, reshaping itself to capitalise on the upside to thrive amid complexity,” said König. “Our half-year results reflect measurable improvement, an opportunity-led strategy, and a well-capitalised balance sheet that positions us to weather volatility and drive long-term value creation.”

Some of the notable highlights during the half-year period include an improvement in Redefine’s loan-to-value (LTV) to 41.2%, moving closer to the targeted 38-41% range. A key contributor is the ongoing simplification of the Polish joint ventures – a strategic priority aimed at lowering LTV, reducing equity risk, and alleviating high finance costs. “Disposing of select joint venture interests would free up capital to reduce debt or reinvest into core assets, both of which support earnings and reduce equity risk,” said König.

Debt strategy delivers stability amid shifting macro conditions

Chief Financial Officer Ntobeko Nyawo said Redefine successfully refinanced the majority of its R3.5 billion in maturing debt in FY2025, with only R500 million remaining. The group’s liquidity position improved to R6 billion from R4.8 billion at 31 August 2024, with ample reserves to cover maturities through to 2026 – a strong buffer as trade-related tariff wars play out.

He noted that 77.6% of total debt is hedged for an average tenor of 1.1 years and the maturity weighted average term of debt is healthy at 3.4 years. Moody’s reaffirmed Redefine’s Ba2 rating with a stable outlook, supporting continued access to debt capital markets. “Our proactive approach, including the successful issue of R2.1 billion in bonds this period, reflects the strength of our debt funding relationships,” said Nyawo.

Industrial and retail outperform, office under pressure

According to Chief Operating Officer Leon Kok, Redefine’s operational performance reflects its sustained focus on efficiency, asset quality, and tenant retention. In South Africa, overall portfolio occupancy improved to 94.7%, with the industrial sector achieving standout results – just 1.1% vacancy, lease renewal reversions of 4.6%, and high tenant retention, all driven by active asset management.

The retail sector also showed a positive turnaround, recording the first positive lease renewal reversion in over three years at 0.4%, indicating improving tenant sentiment and the strength of dominant, well-located centres.

By contrast, the office portfolio remains challenging due to a national oversupply and constrained rental growth which places pressure on renewal reversions. However, nodes like Rosebank and parts of the Western Cape are seeing strong demand for P-grade space. Kok noted that economic growth and political stability, along with clearer interest rate direction, would be key to unlocking rental growth in the office market.

Redefine has also made major progress in its renewable energy drive. “We increased our installed solar PV capacity by 20% during the period to 52 MWp, and we’re targeting a further 25% increase – around 13.3 MW – over the next 6 to 12 months,” said Kok. “This will bring our total installed capacity to over 64 MWp, in line with our commitment to reduce reliance on the national grid and drive long-term sustainability.”

Strategic progress in Poland underpins diversified growth

In Poland, Redefine’s EPP core retail platform maintained an exceptional occupancy of 99.2%, with a healthy rent-to-sales ratio of 9.1%, indicating sustainable tenant health and rental affordability.

Redefine’s Polish logistics platform (ELI), co-owned with Madison, is progressing with a planned portfolio division and revised shareholders agreement, which is expected to be finalised by June. Vacancy in this portfolio is projected to decline from 6.6% to 3.5% by June, thanks to recent leasing activity.

In addition, Redefine is advancing its self-storage platform in Poland, with 10,000 sqm of net lettable area currently under development and 38,000 sqm under consideration. The initial €50 million equity commitment is being deployed into these developments, and the company is actively seeking a co-investment partner to match this with an additional €50 million in capital.

Capitalising on opportunities to enhance relevance

Redefine reaffirms its distributable income per share guidance of 50-53 cents for the period and expects to maintain a dividend payout ratio within the 80-90% range. The company’s strategic focus remains firmly on disciplined capital allocation, simplification of joint ventures, organic growth, and operational efficiency.

“We are not chasing expansion for its own sake,” concluded Konig. “Our goal is to enhance the quality and performance of our current portfolio, maintain liquidity, and continue creating long-term value for our stakeholders. The recent sale of Power Park Olsztyn in Poland, increased ownership in Pan Africa Mall from 51% to 68%, and the completion of its second expansion phase are all examples of how we are optimising our asset base.”

Looking ahead, the group remains focused on harnessing technology as an enabler of more efficient operations and value creation.