Property Flash


Rebosis CEO – Otis Tshabalala

Rebosis Property Fund, the listed real estate investment trust (Reit) will sell its office portfolio for more than R3bn by August, CEO Otis Tshabalala said on Friday.

The company is facing a liquidity crunch and is trying to raise billions in cash so it can reduce its debt. It is in talks with Ulricraft Proprietary to dispose of various government tenanted offices, so that it can focus on being a retail landlord.

Many analysts and investors are concerned that this office deal is a monkey on the back of Rebosis, the first majority black-owned and managed property fund to list on the JSE back in 2011. If it can sell its office portfolio, it can focus on being a retail landlord and compete with the likes of Hyprop Investments, in line with the dreams of its founder, Sisa Ngebulana.

Rebosis is trying to decrease its loan-to-value (LTV) from around 70% to 50%. LTV measures a property fund’s debt relative to the value of its asset portfolio. Fund managers advocate that LTVs should not exceed 40% as a prudent ceiling.

Tshabalala spoke to Property Flash following the release of financial results for the six month period to end-February 2022.

“We want to decrease our LTV as soon as possible and recognise that by selling offices we can move closer to that target. We are nearing completion of the sale which we should complete within the next two months. Then we can refine our portfolio further and develop new properties where we can find a strong return,” Tshabalala said.

Corporate debt has formed a stranglehold around Rebosis as it has battled to pay meet interest expense deadlines in the wake of a disastrous offshore deal in the UK where it lost billions of rand investing in New Frontier Properties, a secondary mall owner in Great Britain. Rebosis spent upwards of R2bn on a controlling stake in New Frontier a few years ago but later sold its position for about R700.

Rebosis reported that vacancies in its retail portfolio accounted for 12.89% of its portfolio, with the mainly sovereign-let office portfolio reporting vacancies of 24.01%, resulting in a combined average portfolio vacancy of 20.00%, excluding office properties earmarked for conversion to student accommodation. Notably, Rebosis did not experience any damage to its portfolio as a result of devastating floods in the Eastern Cape and KwaZulu-Natal.

Its distributable income before tax excluding once-off items increased from a R71.3m loss in the prior comparative period to R72.5m worth of distributable income. The increase was because of lower finance costs of R358m, compared with R516m in 2021, which was mainly driven by a lower repo rate. Other operating expenses also decreased to R76m from R94.5m in 2021, mainly because there were no expenses incurred for the deferred payment liability in the current period.

Rebosis’ portfolio including investment property held for sale, was valued at R13bn, similar to R13.1bn in 2021. This translated to a R156m drop in the values of the properties mostly because of a devaluation of R134m in its retail portfolio.

Rebosis is now under new management and is trying to get back on the radar of institutional investors on the JSE.

“Our priority is to sell the offices and then work our retail portfolio. We appreciate that we are battling with large vacancies at some of our malls and will attack this. For example, we want to develop land around our Forest Hill mall in Centurion. We are looking at day clinics and other tenants which can serve the community,” Tshabalala said.

Alistair Anderson

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