Rebosis turns in better distribution, but no dividend yet

LAST October the group said a agreement had been entered into with Ulricraft, a special-purpose vehicle owned by Vunani Capital Partners, for the disposal of some of Rebosis’ office, including the iconic 'diamond building' on 11 Diagonal Street, Johannesburg.

LAST October the group said a agreement had been entered into with Ulricraft, a special-purpose vehicle owned by Vunani Capital Partners, for the disposal of some of Rebosis’ office, including the iconic 'diamond building' on 11 Diagonal Street, Johannesburg.

Published May 30, 2022

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REBOSIS Property Fund, the commercial and retail real estate investment trust, turned the corner in its operations with a R72.5 million distributable taxed income in the six months to February 28 as shoppers returned to the malls, when compared with a R71.3m loss at the same time a year before.

The “B” shares however fell 10 percent to 18 cents on Friday after the group also warned that uncertainty about a loan renewal may cast doubt on the company’s ability to continue as a going concern.

A R242.9m loan with Rand Merchant Bank expired on August 31 2021. Negotiations were underway to renew the facility to August 31, 2022.

The increase in distributable taxed income was due mainly to lower finance costs of R358m (R516m). Other operating expenses also fell to R76m from: R94.5m as there were no expenses for the deferred payment liability in the current period.

Net property income fell 6 percent on a like-for-like basis. This was mainly due to vacancies on spaces that were occupied in February 2021.

“The retail portfolio performed well as shoppers returned to malls following Covid-related trading restrictions, with year-on-year footfall growth of 14.8 percent, turnover growth of 11.5 percent and annualised trading densities up by 7.4 percent,” CEO Otis Tshabalala said on Friday.

Leases across some 95 930m² of space were renewed in both the retail and office portfolios, in particular at Hemingways Mall in East London and various Department of Public Work renewals, he said.

Vacancies in the retail portfolio accounted for 12.89 percent of the portfolio, while the mainly sovereign-let office portfolio reported vacancies of 24 percent, resulting in a combined average portfolio vacancy of 20 percent, excluding office properties earmarked for conversion to student accommodation.

SA REIT cost-to-income ratio was calculated at 46 percent while SA REIT’s administrative cost-to-income ratio increased slightly to 9 percent from 8 percent.

The portfolio, including investment property held for sale, was valued at R13bn (R13.1bn). Otis said this translated to a R156m drop in the value of the properties mostly due to a devaluation of R134m in the retail portfolio.

The disposal of a portion of the office portfolio for R3.3bn cash was ongoing. The disposal is expected to create some liquidity and to return the entity to a better loan to value position.

“Going forward, we will focus on improving property fundamentals, including emphasis on leasing alternatives, especially at Forest Hill Shopping Centre, to reduce vacancies and increase revenue. We will prioritise negotiations with our funding providers on the renewal of expired and near-term debt facilities to bolster our liquidity in the rising interest rate environment,” he said.

He said the company was developing specific initiatives to bring a differentiated shopping experience within the catchment area of each of their retail centres.

Last October the group said an agreement had been entered into with Ulricraft, a special-purpose vehicle owned by Vunani Capital Partners, for the disposal of some of Rebosis’ office.

Thirty-two office buildings were expected to be sold through this transaction, including the iconic “diamond building” on 11 Diagonal Street, Johannesburg.

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