Presenter: Lindsay Williams Guest(s): Brian Azizollahoff

Property loan stock Redefine - with a market capital of R2.3-billion, and total asset base around R4-billion - reports a distribution of just under 37 cents per linked unit, up 15%, and a net asset value increase for each linked unit of 60% to R4.43. With Redefine chief executive Brian Azizollahoff

LINDSAY WILLIAMS: Redefine’s results came out on Friday - there has been a lot going on in the company with an increased fixed property portfolio, and a decreased listed property portfolio. Brian, maybe you could start on the fixed side - what does your portfolio look like now?

BRIAN AZIZOLLAHOFF: The portfolio is now valued at over R2-billion - it’s close to 2.1-billion, and we have 72 properties. We’re still weighted in favour of commercial - that’s not for want of trying to acquire more retail and industrial but the market is very competitive at the moment and prices are very high. As you know yields are very low, and to find the right kind of property is very difficult but - we will continue looking to boost our retail and our industrial.

LINDSAY WILLIAMS: That’s interesting - so it’s not for want of trying, but you are more weighted towards commercial than retail and industrial, but you would rather redistribute that weighting?

BRIAN AZIZOLLAHOFF: Not necessarily at the moment. What’s interesting is that there has been huge demand for office premises in prime areas - there hasn’t been a great deal of new development for the last year or so, and as the economy continues to grow by 4% to 5% per annum there is a continual expansion of existing businesses, and new businesses entering the market - and they’re looking for premises. We’re in the right areas - we’re in prime areas - and would certainly look to grow our commercial. At the end of the day we are an opportunistic fund - whatever is the right value and will enhance distributions for our unit holders - that’s what we are going to buy.

LINDSAY WILLIAMS: What sort of occupancy rates are you looking at now?

BRIAN AZIZOLLAHOFF: We’re probably the highest in the sector - we’ve got a vacancy of 2.8% in the portfolio across the board.

LINDSAY WILLIAMS: What was that before in the period under review?

BRIAN AZIZOLLAHOFF: It came down from 5.3% - and I think that’s an exceptional performance.

LINDSAY WILLIAMS: It is! There is very little room now for expansion - obviously you’ve to get on the acquisition trail? What interests me is that Redefine started disposing of some listed assets - yet in your statement you say the company would also look to buy listed property stocks if it found value in them! So you’ve got out, and you’re looking to get back in again?

BRIAN AZIZOLLAHOFF: We’re not necessarily looking to get back in - but as I said we’re opportunistic, and we look for value. Where a listed stock may enhance our distribution growth - that’s what we’re after. What’s interesting on the listed side - we started of the year with about R1.3-billion in listed properties, we actually sold R380-million and acquired about R240-million yet ended up at over R1.8-billion - so that just highlights the up-tick in the listed sector.

LINDSAY WILLIAMS: So you’ve been a net seller I suppose in absolute terms, but in real terms - because of the growth of the market - you’ve actually increased your portfolio?

BRAIN AZIZALLOHOFF: Correct.

LINDSAY WILLIAMS: You also say that Redefine is: "Definitely on the trail to acquire fixed property assets," but you’ve also said that there is very little out there, or the stuff that’s out there is too expensive. Are you going to wait for it to pull back?

BRAIN AZIZALLOHOFF: We’re not going to compete against some of the investors who are… I think they over-judging the market, or they don’t recognise the fact that there are some very unrealistic sellers. We will use our experience and knowledge of the market to ensure that we don’t over-pay, and if that means developing new buildings that’s what we will do.

LINDSAY WILLIAMS: Are you seriously looking at the development option?

BRAIN AZIZALLOHOFF: Undoubtedly.

LINDSAY WILLIAMS: Can you tell us any more?

BRAIN AZIZALLOHOFF: We’re rapidly reaching the completion of the South Coast Mall, and we’re now looking at another development opportunity on the West Rand. I don’t want to go into too much detail on that, but yes we’re looking at development opportunities. What’s recently come to the fore are some very good opportunities in the industrial arena.

LINDSAY WILLIAMS: This may be an unfair question, but the fact that Redefine has been selling off a few of its listed property assets - does that mean Redefine as a listed asset is also at the top of the market?

BRAIN AZIZALLOHOFF: I think we still have legs.