Picture: Sarah Makoe
Picture: Sarah Makoe

Rebosis board opts to pay no dividend due to high debt

By Edward West Time of article published Jan 11, 2022

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REBOSIS Property Fund’s board has opted not to pay a dividend for the year to August 31, 2021 to continue reducing a heavy debt load.

The fund did not pass the liquidity test to pay dividends for the year. It was in a net-operating loss position and also in breach of its bank debt covenants. It announced in October that it had entered into a R6.3 billion sales agreement with Ulricraft, a special-purpose vehicle owned by Vunani Capital Partners.

Proceeds from the proposed deal, which involves the sale of 32 of Rebosis’s commercial buildings, including the “diamond building” on 11 Diagonal Street, Johannesburg – and which is still subject to several conditions – is aimed at reducing Rebosis’s debt.

Rebosis’s share price increased 7.3 percent to 30 cents on the JSE yesterday morning, while its “A” shares increased in value by 1.45 percent to R3.45.

Results published yesterday showed loan to value (LTV) at a high 71.4 percent.

In the current uncertain trading environment, analysts and investors are most comfortable with LTV of around 40 percent or lower.

Rebosis currently owns a portfolio worth about R13.1 billion, comprising five regional and super regional shopping malls: Baywest, Hemingways, Forest Hill, Sunnypark and Bloed Street, 38 commercial properties that are mainly tenanted by government agencies, as well as a small industrial property portfolio.

After the Ulricraft sale, Rebosis is set to become a smaller real estate investment trust valued at about R7.5bn. With its portfolio predominantly retail-focused it will have the five malls and four other commercial assets. LTV should be around 42 percent.

By the financial year-end interest-bearing debt stood at R9.5bn. Net property income fell by 10 percent during the year when compared on a like-for-like basis to the prior year, as a result of reversions on the portfolio as well as increase in rates assessments.

The distributable income before tax, excluding one-off items, came to R83 million, following lower head office costs of R151m from from R175m, and lower finance costs of R602m from R828m. This was due to the repo rate cuts and the repayment of facilities using proceeds from the Medscheme building sale.

The retail and commercial property portfolio was independently valued at year-end. During the period, proceeds from the disposal of the Medscheme building were used to settle Standard Bank facilities to the value of R89.1m.

The fair value of the portfolio as at August 31 was increased by 0.3 percent year-on-year, excluding the Medscheme building disposal.

The increase was mainly due to successful government lease renewals and the strong covenant tenant profile in the retail portfolio.

Some 98 percent of the expired debt was renewed during the year. The rental collections rate including arrears, stood at 103.9 percent at year end.

The distributable income per “A” came to 292.72 cents, while there was no distributable income per “B” share.

Three of the properties being sold: the NBC building, 373 Pretorius Street building, and 174 Visagie Street building, were being converted from office space into purpose-built student accommodation.

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