• Distributable income of R72.5 million (2021: R71.3 million loss)
• 95 930m² of leases renewed across retail and commercial portfolios
• New vacancy letting of 9 833 m²
• 101% rental collection rate on portfolio for the period under review
• Annualised retail trading density growth of 7.4%
  • Strong footfall growth of 14.8% y-o-y
  • Turnover growth of 11.5% y-o-y
• Fair value of portfolio remained relatively stable at R13.0 billion (2021: 13.1 billion)
• Revised R3.3 billion disposal to consolidate office portfolio and create liquidity

Distributable income before tax excluding once-off items increased from a R71.3 million loss in the prior comparative period to a R72.5 million distributable income. The increase is due mainly to lower finance costs of R358 million (2021: R516 million), which was mainly driven by a lower repo rate. Other operating expenses also decreased to R76 million (2021: R94.5 million), mainly because there were no expenses incurred for the deferred payment liability in the current period. 

Net property income decreased by 6% when compared on a like-for-like basis to the prior period. This is mainly due to vacancies on spaces that were occupied in February 2021.

“The retail portfolio performed well as shoppers returned to malls following Covid related trading restrictions, with year-on-year footfall growth of 14.8%, turnover growth of 11.5% and annualised trading densities up by 7.4%. We successfully renewed 95 930m2, across both the retail and commercial office portfolios, in particular at Hemingways Mall in East London and various Department of Public work renewals. New leases of 9 833m² was also concluded in the six-month period,” commented Chief Executive Officer Otis Tshabalala.

Vacancies in the retail portfolio accounted for 12.89% of the 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. Rebosis did not experience any damage to its portfolio as a result of devastating floods in the Eastern Cape and KwaZulu-Natal.

SA REIT cost-to-income ratio was calculated at 46% whilst SA REIT administrative cost-to-income ratio increased slightly to 9% from 8% in the previous comparable period.

The portfolio, including investment property held for sale, was valued at R13.0 billion (2021: R13.1 billion). This translates to a R156 million drop in the values of the properties mostly due to a devaluation of R134 million in the retail portfolio.

The disposal of a portion of the Group’s office portfolio for a revised aggregate cash consideration of R3.3 billion is ongoing, as communicated to the market in March and May this year respectively and is expected to be concluded in the current financial year. The disposal is expected to create some liquidity and to return the entity to a better loan to value position.

“Going forward, we will continue to focus on improving property fundamentals in the current financial year, including emphasis on leasing alternatives, especially at Forest Hill Shopping Centre, to reduce vacancies and increase revenue. We will continue to prioritise negotiations with our funding providers on the renewal of expired and near-term debt facilities to bolster our liquidity in the rising interest rate environment.

“We remain cautiously optimistic of the improved trading densities and dominant position of our retail portfolio in the context of rising interest rates and higher food and fuel costs, which is expected to constrain consumer spending. We are developing specific initiatives to bring a differentiated shopping experience within the catchment area of each of our retail centres,” said Tshabalala.