Our opinion on the current state of REDEFINE(RDF)

Redefine (RDF) is South Africa's second-largest real estate investment trust (REIT) after Growthpoint, with assets totaling R72.9 billion and a market capitalization of R25.1 billion. The company's portfolio is primarily composed of industrial and office properties, with significant investments in Poland, the UK, and Australia. As a REIT, Redefine is closely tied to the performance of the South African economy and political climate, particularly elections. Despite these challenges, Redefine remains stable and well-managed, trading at a valuation considerably lower than the book value of its assets.

Redefine has expressed interest in acquiring a controlling stake in the Polish property company, EPP. In its results for the six months ending February 29, 2024, the company reported revenue growth of 8.2%, while headline earnings per share (HEPS) declined by 14.6%. Redefine's loan-to-value (LTV) ratio stood at 42.6%, and its net asset value (NAV) was 780.3 cents per share, compared to a share price of 394 cents.

Technically, Redefine's share price has been on a downward trend from its peak of 1250 cents in April 2015, dropping to approximately 600 cents before plummeting to 159 cents with the onset of the COVID-19 pandemic. Although it has since recovered, the share has been moving sideways and slightly downward since November 2021. It currently trades at around 50.5% of its NAV.

Despite this, Redefine still appears undervalued, offering an attractive opportunity for investors. However, its relatively high LTV remains a point of concern.