As higher interest rates still pile pressure on listed property stocks.

Redefine Properties delivered a flat interim dividend on Monday for the half-year ended 29 February 2024, with its dividend per share coming in 0.2% weaker at 20.27c compared to 20.32c for its 2023 interim period.

This is despite the group upping its Distributable Income Per Share (Dips) by 6% – to 25.34c for HY2024, from 23.91c for HY2023. It opted for an 80% dividend payout ratio for the half-year to retain some cash in the face of decade-high interest rates, which has seen debt servicing costs of SA’s Real Estate Investment Trusts (Reits) spike.

Following the release of its latest results, Redefine’s share price traded around 3% weaker just before midday, at around R3.95 a share.

The group said that the increase in Dips is due to the counter’s total distributable income increasing “by a respectable 6.1% to R1.7 billion” for the period.

Despite a flat interim dividend, Redefine CEO Andrew König declared that the group had “delivered a solid performance” taking into account “the really tough operating environment”.

He said many are awaiting a turn in the interest rate cycle, with current high interest rates piling further pressure on listed property stocks.

“Like other local counters, we’ve navigated a difficult downturn and maintained our resilience… The higher-for-longer interest rates remain a persistent theme and relief is critical to moving the dial on most outcomes,” said König.

“Redefine is, however, not hitching its fortunes to interest rate cuts. Instead, we have focused on variables within our control that can directly influence value creation, like capital allocation, capital sourcing, maximising rentals, and containing costs,” he added.

Ntobeko Nyawo, Redefine’s CFO, said the group was able to sustain its operating profit margin at 76.5% (HY23: 76.7%), despite the tough conditions that local property counters and other interest rate-sensitive companies find themselves in.

“Elevated levels of inflation remain stubbornly sticky, which means that any interest rate relief can be anticipated to only flow in FY25,” the group pointed out in its results release on Sens.

It added that the “timing of the interest rate cuts” mean “the lagged effects of elevated interest rates need to play out”

“National elections, continued parastatal frailty, and geopolitical instability are issues that we will keep our eye on, but we won’t allow these variables, which are largely out of our control, to distract us from what matters most,” it said.

Redefine, which has property assets under management of over R100 billion largely in SA and Poland, has maintained its full year guidance. The group expects distributable income of between 48c per share and 52c per share for the year.

“Over the full year, we anticipate applying a dividend payout ratio of between 80% and 90%, dependent on operational capital expenditure requirements, debt covenant levels, liquidity events and tax considerations,” it said.