Rebosis Shareholders might have to hold their horses

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Rebosis Property Fund CEO Sisa Ngebulana believes his plan would be able to ride out South Africa’s stalling economy. Rebosis Property Fund CEO Sisa Ngebulana believes his plan would be able to ride out South Africa’s stalling economy.

Shareholders might have to hold their horses because the Chief Ex has a plan to save the ailing Rebosis Property Fund.

Last year, the group chose to withhold its dividend for its year to end-August as it battled to grow rentals given what CEO Sisa Ngebulana said were the worst market conditions for South African commercial property in memory.

Meanwhile, Rebosis’ board says it is making progress in its bid to merge with Delta Property Fund and if a circular about how a tie-up would proceed was not released in the next five weeks, the two companies would scrap the plan.

The company has also been trying to cut its loan-to-value (LTV) from about 60% to below 40%, by selling assets. Its debt was last disclosed at R9.5 billion in November 2019. Most fund managers want property counters to have LTVs of between 30% and 40%.

Earlier this month, in an unprecedented move in the listed real estate sector, 80% of Rebosis Property Fund’s ordinary shareholders voted against implementing the company’s remuneration policy.

The company has been through a turbulent two years in which it wrote off its investment in UK mall owner New Frontier Properties, having lost more than R2bn of its value, and has had to sell offices and malls in SA to handle its escalating debt levels.

The share prices of its A and B shares have each fallen more than 90% in the past two years.

Rebosis has a dual share A and B structure, which is designed to serve investors of varying risk appetites.

A-linked shareholders are paid first and are first in the queue should the company be wound up. Their dividend growth is capped at 5%. B-linked shareholders are paid whatever is left over and there is no limit on the potential growth of their dividends.

In a few years, Ngebulana has turned Rebosis from being a company with only seven properties worth R3.3-billion when it listed on the JSE in May 2011 to one that is one of the bourse’s most consistent dividend payers, with more than 40 properties valued at R16.3-billion today.

Its portfolio of properties includes well-known shopping centres, including Baywest Mall in Port Elizabeth, Forest Hill in Centurion, and Hemingways Mall in the Eastern Cape and more than 30 office properties, most of which are let to government departments and agencies.

Underpinning the Rebosis rescue plan is its potential merger with Delta Property Fund, a JSE-listed real estate company co-founded by Sandile Nomvete that owns a portfolio of properties worth R11.3-billion, comprising 81 office properties tenanted by government departments.

If successful, the proposed merger could create an enlarged black-owned and managed entity with property assets that are worth more than R25-billion at a time when racial transformation in the sector remains woeful.

Ngebulana believes the enlarged entity would be able to ride out SA’s stalling economy and the resultant lack of demand for property space by tenants because institutional investors prefer investing in real estate companies with scale and liquidity to their shares, making it easier to raise capital to fund growth initiatives.


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