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Distributable earnings guidance on investment in EPP
REDEFINE PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1999/018591/06)
JSE share code: RDF ISIN: ZAE000190252
Debt company code: BIRDF
LEI: 37890061EC026A7DA532
(Approved as a REIT by the JSE)
("Redefine" or the "Company")
DISTRIBUTABLE EARNINGS GUIDANCE ON INVESTMENT IN EPP
Shareholders and noteholders are referred to the Company's interim results ("interim results") for the six
months ended 28 February 2022 ("H1 2022") published on 16 May 2022 wherein Redefine inter alia advised
that it expected distributable income per share for the year ending 31 August 2022 ("FY 2022") to be between
50.0 and 55.0 cents per share and, assuming a dividend pay-out ratio of 90%, it would expect the dividend
per share to be between 45.0 and 49.5 cents per share.
Redefine's guidance provided for FY 2022 as set out above remains unchanged but Redefine wishes to
provide additional information on the expected contribution of EPP N.V. ("EPP") towards Redefine's
distributable earnings for FY 2022 and the year ending 31 August 2023 ("FY 2023").
Following the implementation of Redefine's offer to EPP shareholders as detailed in a circular issued by EPP
on 17 December 2021, together with the subsequent reorganisation of EPP and the acquisition of the
additional EPP shares from EPP shareholders who did not accept the initial offer, Redefine's shareholding in
EPP is now 95.45% (the "EPP transaction").
Redefine expects that EPP will contribute approximately 7.5 cents per share of the Company's expected
distributable income per share ("DIPS") for FY 2022. The 7.5 cents includes the 4.0 cents per share
antecedent earnings adjustment that relates to the Redefine shares issued for the EPP transaction. On a
normalised basis and subject to the successful refinancing of EPP's maturing debt facilities Redefine expects
EPP to contribute between 8.5 and 9.5 cents per share of the Company's DIPS for FY 2023. Redefine
believes that the long-term prospects of its Polish retail exposure remain attractive, however EPP must
contend with and manage the short-term volatility.
The following assumptions have been used in deriving the forecast of the expected contribution of EPP
towards Redefine's distributable earnings:
1. Existing trading conditions in the Polish retail sector prevail for the duration of the forecast period.
2. Inflation in Poland is expected to remain above 10% which has a direct impact on property and general
operating expenses. During 2022 energy and wages have increased significantly above the inflation
rate due to the ongoing war in Ukraine, the introduction of EU carbon tax on CO2 emissions and the
increase of the minimum wage.
3. Inflation in the EU is expected to be at least at 6% in 2022, which will only impact the rent indexation
in force from the beginning of the 2023 calendar year.
4. The cost of funding is expected to rise to approximately 4% due to an increase in bank margins
charged due to liquidity concerns caused by the war in the Ukraine and the increase in the EURIBOR
swap curve in anticipation of interest rates rising due to inflation.
5. Redefine's 95.45% of EPP distributable income is translated at a ZAR/EUR exchange rate of R17.0.
6. EPP's distributable income is calculated in accordance with the Best Practice Recommendations
issued by the SA REIT Association.
It is anticipated that EPP's contribution to Redefine's distributable income will stabilise between 10.0 and
11.0 cents per share post FY 2023.
The forecast information in this announcement has not been reviewed or reported on by Redefine's
independent external auditors.
24 June 2022
Sponsor
Java Capital
Date: 24-06-2022 12:45:00
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