Its National Long-term secured debt rating is affirmed at 'A-(A minus)(zaf)'. Its Long-term debt (unsecured) and subordinated debentures are affirmed at 'BBB(zaf)' and 'BB(zaf)', respectively.

The revision of the Outlook follows Redefine's growth to become one of the larger players in the sector while maintaining financial discipline. Gearing (as measured by long-term debt to non-current assets) has reduced over the past four years to a reasonable 34% at FYE07, well below the industry norm of about 50%. Asset quality and diversity has been maintained, and the tenant profile shows more than 50% categorised as 'A-grade'. The Positive Outlook further reflects Fitch's expectations that Redefine will not allow gearing to exceed the current level, and will continue to grow its commercial property portfolio underpinned by long-term leases, a good tenant base, and a low vacancy rate. The agency will be looking to see whether this sound profile will be maintained during FY08 in the face of economic slowdown, higher interest rates and rising inflation.

The affirmation comes on the back of impressive earnings and asset growth as reported in Redefine's results for the year ended 31 August 2007. Growth was largely achieved from the successful acquisition of 100% of Cape Town-based property company, Spearhead Properties, during FY07. Spearhead's property portfolio totalled ZAR1.6bn at the time of the acquisition, with FY06 revenue of ZAR147.2m. Redefine's property portfolio at FYE07 doubled to ZAR5bn from a year ago, and total revenue (including income from its listed securities portfolio) grew 57% to ZAR829.6m . The purchase price of ZAR1.4bn was funded from the issue of new linked units.

Redefine consolidated about ZAR808m of Spearhead debt, but gearing improved to 34% from 41%.

The acquisition of Spearhead has skewed Redefine's geographic diversification to a 48% exposure (per gross lettable area) to the western Cape region (previously 12%), but the portfolio is expected to become more balanced in favour of Gauteng. It is also likely that the company will grow its property portfolio at the expense of its listed securities portfolio, and the "hybrid" structure will become less discernible.