Revaluation shock for Rebosis as value of its retail properties plummets 21%
CAPE TOWN – Rebosis Property Fund’s retail properties were revalued downwards by 21 percent to R6.2 billion due to the impact of the lockdown on directors’ valuations, its results for the six months to February 29, 2020 showed on Monday.
The share price fell 8.9 percent to 41 cents on the JSE at midday, before closing at 39c. Most of the income of the first black-managed and substantially black-held property fund, to be listed on the JSE, is derived from commercial leases to national government departments across 36 buildings.
The retail portfolio has dominant shopping centres in Port Elizabeth (Baywest Mall) and East London (Hemingway’s Mall), and three regional malls in Pretoria.
Chief executive Dr Sisa Ngebulana said despite the difficult trading environment, “the portfolio has overall performed very well, our retail performed exceptionally”.
He said retail trading density had increased by 6.5 percent and footfall was up 1.9 percent.
“This speaks to the dominance of our centres and the wide-range product offer we carry compared to peers in our primary market,” he said in a statement.
Property income decreased to R924.2 million (R953.3m), operating profit lowered to R540.2m (R600.3m), while loss for the period narrowed to R1.8bn (R2bn).
The headline loss came to 12.84c per share, versus headline earnings of 11.13c per share in 2019.
Total distributable earnings fell 173 percent to R22m over the same time last year, after tough trading conditions. The slide in net property income related to reversions and loss of income from properties sold. Retail footfall growth grew 1.9 percent.
Net asset value per “A” share came to 0.77c, compared with 13.65c per share previously, while net asset value per B share came to 5.57c versus 6.99c previously. No interim dividend was declared.
The lower interest rates would have a material impact on the fund. The board said it remained confident on the defensive nature of the office portfolio and that this would mitigate risk from the retail portfolio.
Covid-19 had negatively impacted retailers, and rental collections of 73 percent, 78 percent and 88 percent were achieved in April, May and June, respectively.
“While we anticipate higher collection rates going forward, the food, beverage, services and entertainment sectors may not recover. Our objective will be to continue to assist small businesses to ensure continuity through sensible rent concessions,” Ngebulana said.
“Our focus will be on achieving good lease renewals and vacancy fill-ups that are more informed by innovative repositioning of the offerings in our retail centres, in line with global trends.”
The balance sheet would continue to be deleveraged through asset disposals, with some transactions in progress, he said.