Property Flash


May 19 2023

Will Rebosis Property Fund’s assets be sold to high-calibre investors with BEE credentials?

There are concerns that business rescue process around Rebosis Property Fund, the first majority black owned property company to list back in 2011, will be a failure for transformation.

The company’s assets need to be sold to a black investors who have a strong track record of investing in real estate and managing those assets well. These people need to be able to clinch long-term government leases on Rebosis’ office buildings.

The problem is that a large group of white investors is likely to buy too many of Rebosis’ 35 office buildings. Clumps of these white investors would land up with say five offices each, with government tenants. They won’t have the broad-based black economic empowerment (BBBEE) profile to sign longer term leases in terms of SA’s procurement laws. The procurement laws are good in theory for empowerment but we need the right buyers.

Rebosis which was founded by businessman, Sisa Ngebulana in 2010 and listed in 2010, is an abject failure. It was supposed to be a shining example of black business. But it was poorly managed and was placed into business rescue in August 2022. It also invested in the UK, by buying the majority of New Frontier Properties, a mall owner. But this deal saw Ngebulana be rewarded extra fees which would not sit well with its board. The advent of Brexit didn’t help and New Frontier collapsed. Rebosis spent R1.2bn on its stake in New Frontier in 2015 and then sold that stake for R700 in 2019.

The company’s business rescue practitioners are Jacques du Toit and Kobus Cloete of Du Toit Business Rescue stress however that there are high quality buyers in the market for Rebosis’ assets. They told Property Flash that around 50 parties have registered for a public sales process. Rebosis owes banks R9.5bn with the vast majority of this debt owed to Nedbank. The company needs to sell as large portion of its R11.2bn in assets to cover this debt.

Andrew Brooking of Java Capital, an advisory group which consults many of SA’s property funds, stresses that there is a high caliber of buyer interested in Rebosis’ properties. Java will adjudicate the offers for the assets and compile a list of preferred bidders.

All five of Rebosis’ shopping malls are expected to be sold, he says, including its flagship assets: Baywest Mall in Gqeberha, Hemingways Mall in East London, valued together at about R3.3bn and Forest Hill in Centurion.

It’s ironic that the deal where Billlion Group, a developer founded by Ngebulana, sold Baywest and Forest Hill to Rebosis, was seen to benefit the executives of Rebosis but not shareholders. Rebosis was argued to overpaid for these assets.

The group would then be left with the 35 office buildings and one industrial building. It remains to be seen if the offices are bought by investors who can manage them successfully, or we may be left with mini-Rebosis’ which are full of problems.

The process is expected to take around seven months and Rebosis will most likely be delisted and wound up afterward.

Ngebulana still owns 29% of Rebosis’ A shares and 16% of its B shares.

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