Redefine Properties – one of the country’s biggest real estate groups with R94.1 billion in assets under management and R60 billion of which is in South Africa – reports in its half-year results that net diesel costs had a 1.5% impact on its earnings.

It is the latest group to highlight the impact of load shedding and SA’s power crises on its business and ESG (environment, social and governance) goals.

According to Redefine’s interim results presentation published on Monday, the group’s average net diesel costs come to R35 400 per hour across its SA portfolio.

The JSE-listed real estate investment trust (Reit) however notes that currently it has a 73.2% diesel cost recovery ratio for its active portfolio. This means most of the diesel costs are covered by its tenants, thus increasing SA’s cost of doing business.

The group did not cite the overall impact of load shedding on its business, for example periods of lost trade at tenants not paying for generator backup and when solar installations are affected.

Speaking during a results media briefing on Monday, Redefine CEO Andrew König said the group had not qualified the overall impact of load shedding on its business. However, he stressed that most, if not all, the group’s properties “had some sort of [backup] power generator capacity”.

He reiterated that over 70% of these diesel costs are recouped from tenants, while the rest cover general areas of properties – diesel costs that “Redefine has to stomach” he added.

Emergency backup

Besides its extensive and growing solar footprint, Redefine noted in its results presentation that it maintains “a stable emergency backup with 191 diesel generators with 126 586 kVA generation capacity” in its SA portfolio.

The extra cost of diesel was a contributing factor to the group’s distributable income per share (Dips) and dividend per share (Dps) declining by 9.2% and 14.2%, respectively, for the half-year period ended 28 February 2023.

Dips declined to 23.91 cents (HY2022: 26.33c), while DPS came in at 20.32c, compared to 23.69c for the comparative half year in 2022.

“The board has declared a cash dividend of 20.32 cents per share for the six months ended 28 February 2023,” the group highlighted in its Sens short-form release.

Despite the decline in dividend, shareholders will be relieved that the group did not decide to withhold its interim dividend like fellow SA Reit Hyprop investments. During the Covid-19 fallout, Redefine did not declare an interim or full year dividend for a year.

Following the release of its latest results, Redefine’s shares were trading around 6% weaker by midday on Monday, at R3.58 a share.