R770 million shopping mall opens in South Africa with new life

Redefine Properties has officially opened the newly expanded Pan Africa Mall in Alexandra, which added 9,000 square metres of additional space and a feature facelift.

The 25,000-square-metre mall is co-owned by Redefine Properties and Talis Property Fund.

In May 2024, Redefine acquired 50.87% of Pan Africa Development Proprietary Limited (PAD) from Atterbury Property Fund Proprietary Limited (Atterbury).

Redefine’s latest financial results show that its 50.9% controlling stake in the mall has a fair value of R395 million and a net asset value of R177 million (R775 million and R350 million, respectively, when covering the full value).

The mall opened in 2009 to become South Africa’s first fully integrated shopping mall and a 50,000 sqm taxi facility.

The centre now features a new upper-level floor for fashion retailers, including the relocated Mr Price and Ackermans stores, and an extended ground floor, which includes a new Roots Butchery, an expanded Truworths, and an FNB branch.

Notable new tenants include W.Edit, Sportscene, Pick n Pay Clothing, Jam Clothing, Hungry Lion, Vision Works, The HUB, Selfast, Nizams, Clothing Junction, and Tekkie Town.

Andrew König, Redefine’s Chief Executive Officer, said the expansion would create opportunities for local businesses and investment in sustainable solutions like solar power.

The upgrade incorporates full backup power and water – including the exploration of sinking a borehole, an R12.2 million solar photovoltaic (PV) system with an 851kWp capacity, and installing energy-efficient lighting and water-efficient toilets.

Tebogo Mogashoa, Chairman of Talis Property Fund, said the expansion was an investment in the area’s wider economy.

“Street hawkers are now being offered permanent stalls – managed by the Alexandra Taxi Association.

“This project is about more than just expanding a shopping centre. It is about empowering local businesses and driving urban renewal in Alexandra,” the groups said.

Redefine results

Redefine, which owns many of South Africa’s top shopping malls, reported solid results for the year ended August 2024, with headline earnings up close to 60% over the period.

Revenue increased 7.5% to R10.65 billion for the year (2023: R9.9 billion), with headline earnings attributable to shareholders up to R2.23 billion from R1.4 billion previously.

Headline earnings per share were 57.3% to 33.06 cents (2023: 21.02 cents). The board declared a dividend of 22.25 ents per share for the six-month period ended 31 August 2024, taking the final divided to 42.52 cents per share, down slightly from 2023.

The group noted that the improved results are off a back of a strained previous period, with the current year showing a turn for the market.

Redefine’s COO, Leon Kok, noted that during the reporting period, most of the company’s South African operating metrics have either stabilised or improved.

“In particular, occupancy rates increased to 93.2%, up from 93.0% in FY23, with noticeable enhancements across all sectors,” he said.

Tenant retention, which has become more difficult due to heightened competition from excess supply, is nearing 90%, and Redefine’s retail portfolio continued to perform well, with occupancy rates for FY24 rising to 95.0% (FY23: 93.6%).

“We anticipate further improvements in occupancy rates for FY25 due to positive sentiment and decreasing interest rates, which are expected to enhance consumer spending power.”

Looking ahead, the group said that “the fortunes of commercial real estate are inextricably tied to confidence and interest rates”.

“Confidence is currently being restored on the back of lower political uncertainty, improved electricity supply, and progress made in implementing broader institutional and economic reform programmes to address long-standing constraints,” it said.

“The positive shift in confidence is playing out in the stabilization and, in some cases, improvement of operational performance indicators across all property sectors.”

Notably, monetary policy has taken a dovish turn during September, when interest rates were cut by 25 basis points, and Redefine said this points to the start of an interest rate easing cycle.

“With confidence and interest rates working in tandem, bond yields are lower and REIT share prices are higher, which bodes well for accessing the equity market or using scrip as settlement currency and is supportive of further improvements to property fundamentals.”

Coming off a prolonged trough, the group said the business is looking forward to an upward property cycle in FY25, which will likely be gradual as the lingering effects of elevated interest rates are worked off, and global risks remain.

Read: Big change at many of South Africa’s largest shopping malls