RMB Holdings (RMH) has rejected offers to buy its last remaining major assets in RMB Properties, the group said Friday.
It said it would continued to try to monetise its last major investments in RMH Properties, but weak property fundamentals in South Africa might affect the timing, the company said in its interim results for the six months to September 30.
RMH unbundled its investment in FirstRand in June 2020. Its subsidiary Rand Merchant Investment Holdings also recently announced the unbundling of interests in Discovery and Momentum Metropolitan, in line with a strategy to liberate investments at the appropriate stage, and to achieve the best value reflection.
In October, RMH was approached to sell various property assets but its board said on Friday that these approaches had been rejected on the basis that both the discount to NAV (net asset value) and RMH’s conservative assessment of future NAV, were not within an acceptable range. RMH said the offers were received from entities closely aligned with the Atterbury group, which the board believes would be the most likely potential acquirer of these businesses.
The group said it remained committed to the existing partnership between Atterbury and RMH Property.
RMH’s market capitalisation fell 16 percent to R2.1 billion in the interim period.
Cash resources increased 7 percent to R446 million. NAV per share, a key valuation metric for investment groups, decreased by 19 percent to 263.9cents.
RMH Property’s carrying value per share increased 9 percent to 198.9c. Net profit rose more than 100 percent to R177m, from a loss of R45m in the same period in 2020. Taxed profits of associates and joint ventures increased more than 100 percent to R166m from R19m.
Excluding cash retained for the special dividend, the NAV per share increased by 7 percent from 247.4c per share. The market capitalisation reflected the R1.1bn earmarked for the special dividend.
The 7 percent uplift in NAV to R3.73bn was attributed to the rand/ euro exchange rate which contributed R20m, while the remainder was due to improvement in operating performance of RMH Property investees, as the Covid19 pandemic impact was starting to ease.
The gross value of RMH Property increased by R225m due to the increase in NAV of underlying investees, and a further increase of R10m in the loan to Integer.
The growth in investee NAV was mainly due to the revaluation of Castle Gate Retail Centre, which started trading towards the end of 2020, and the value increase in Ascencia shares after its move to the primary exchange in Mauritius.
The property portfolio did not emerge unscathed from the July civil unrest, with significant damage to the Pan African Mall owned by Atterbury. Repairs had started and a portion of the claim from Sasria had been received.
RMH said while both the local and international investees were experiencing some improvement in operating results, it was too early to predict the permanent impact that the hybrid work from home phenomenon would have on the office sector.
Early indications were that the offshore assets would not be as heavily impacted as in the local market, as property fundamentals before the pandemic were already quite different.
Most argue South African corporates planned to reduce their physical real estate footprint. As per the office vacancy survey conducted by MSCI at the end of the third quarter of 2021, office property vacancies were at a high of 15.4 percent, with 2.91 million square metres of available unoccupied space.
The muted economic outlook, and the impact of the global trajectory in light of Covid-19 uncertainty, would likely limit potential for a strong turnaround in the near term, RMH said.
RMH’s share price rose 1.33% to R1.52 at the JSE close on Friday.
BUSINESS REPORT ONLINE