Redefine CEO Andrew Konig talks about new role at helm of group‚ plans to grow and diversify property portfolio and company's approach to acquisitions‚ in this interview conducted on August 4.

BUSINESS DAY TV: Redefine Properties has restructured its board following the resignation of the former chairman‚ Dines Gihwala. Joining me now on News Leader is the freshly minted CEO of the company‚ Andrew Konig.

I feel like I've had quite a lot of interviews with you over the past few weeks. Congratulations on your appointment‚ but I have to ask ... does anything actually change because Marc Wainer who is‚ if not in stature but certainly reputationally‚ massive in that he has built up Redefine to where it is today ... he is an executive chairman and as I understand‚ will be in charge of group strategy. So what does this appointment actually mean?

ANDREW KONIG: Marc is very cognisant of the situation and he has been at pains to explain that he is stepping away from the day-to-day management of Redefine‚ that will fall under my control and Marc will be focused purely on growing and diversifying the business.

So he is going to be operating effectively outside of the management structure ... yes. We have him in the background as a mentor and he gives me tremendous support in the day-to-day decisions‚ but by no means is he going to be overstepping that area for which I'm responsible.

BDTV: It is quite tricky when you've had someone who has been so used to that executive position and then they step aside. I imagine it's not the easiest thing. You must both probably be aware of the pitfalls of this?

AK: We are. Marc actually offered to take a sabbatical to make the break between his authority and mine. I suggested otherwise‚ because he has just been on a cruise for about a month. So he has already made the break and I believe it's going to be quite a seamless process.

The staff are fully aware of the change and yes‚ the temptation might be there to go to Marc‚ but they do understand how the reporting lines are going to work going forward.

BDTV: What then are you tasked with‚ and what's your plan for the company? ... also do you have a fixed term now as CEO or do you intend to remain indefinitely with Redefine?

AK: There's no term if I can put it that way. Obviously everybody's job goes through a constant review process and over time‚ time will be the judge of whether I'm successful or not.

But just in terms of reports‚ all the managers of Redefine do report to me ... the heads of property‚ development‚ marketing and so forth as well as finance obviously‚ which was my previous role.

But in terms of plans going forward‚ Redefine isn't broke so there is nothing really to fix. Rebuilding the jumbo in mid-air isn't for me. We'll continue on the path that we've chosen‚ which is to restructure the property portfolio‚ grow and diversify it both geographically as well as in South Africa ... and it's much of the same.

At the end of the day we want Redefine to be the best Reit (Real Estate Investment Trust) in South Africa‚ and by best I mean best employer‚ best investment choice‚ and we just want to stand out and really have a pointed differentiation to the rest of the market

BDTV: How are you going to make that point of differentiation ... besides being best employer and standout Reit? And you talk about restructuring process ... isn't it largely completed for Redefine‚ or what do you still have to do?

AK: It's a continuous process so yes we've now‚ with the imminent Fountainhead transaction that we hope will be approved in due course‚ the restructure is largely complete but there are bolt-ons that we can do to further diversify and grow the portfolio.

What we're trying to achieve is growing‚ and sustainable returns to our investors and by growing and diversifying we limit risk

We are in challenging times and as you get bigger you can absorb knocks as and when they occur. As you know‚ in business there are always those situations which come along‚ that you haven't foreseen and if you are of a certain scale you are able to absorb them without any undue impact on your distributions.

BDTV: Maybe you can just remind us‚ what the predominant area of focus ... within the Redefine portfolio ... you've got 250-odd properties‚ excluding the Fountainhead deal ... where does the bulk of your income lie and now I've gone a bit fuzzy ... if it's office‚ retail or commercial?

AK: If I can just unpack firstly our property asset base‚ we have about R25bn of Redefine properties at the moment. If we include the Fountainhead transaction‚ that would grow the total assets under our control by a further R12bn-odd‚ so that would be R37bn.

We've got about a further R8bn-odd invested offshore which takes you to about R45bn of property assets. There are loans receivable‚ etcetera that can be included as income producing. That takes us just up to the R50bn mark in terms of income producing assets. Now in terms of the income split‚ about 15% of our asset base is invested offshore and about 20% of our income is derived from international sources.BDTV: That's Redefine International?

AK: Yes ... Redefine International plus Cromwell. And we also have a property that we own directly in partnership with Cromwell down in Australia. That accounts for 20% of our income.

In terms of that 80% that is locally derived‚ we are now moving ... and this is with the inclusion now of Fountainhead into our numbers ... just over 50% of that income will be derived from retail property assets and about 30%-odd will be from offices ... the balance being industrial properties.

BDTV: So definite focus on retail. Do you have any particular plans for say the next five years because I suppose the development of Redefine into this almost R50bn powerhouse began with the acquisition of ApexHi ... do you have any plans to further increase the value of the property portfolio ... would you want to be R100bn or is it actually immaterial the size of the assets that you have under management?

AK: We've always stuck to our guns when we've said that being the biggest isn't what we want to be ... we just want to be the best. Now if it does involve an opportunistic acquisition along the way to bolster earnings‚ plus not add any undue risk to the portfolio we're happy to do so. </p> <p>We are opportunistic. We are always on the lookout for acquisitions to increase ... as I said to diversify our asset base as well as to grow the income

There are limits to our balance sheet ... we can't buy the world so we've had very supportive investors and funders and hopefully it will continue going forward‚ but we've got a loan to value ratio of about 35%-40% that we want to maintain.

So as and when opportunities arise‚ we would need to talk to the investors and the funders to ensure that there is appetite for them to further invest in Redefine to enable us to grow.

So I suppose growth is‚ to some extent‚ constrained by investors and funding support. Our balance sheet at this stage is fairly stretched so as and when we do see opportunities we will have to be talking to our investor base.

Source: BD