Substantially black-held property company Rebosis Property Fund on Thursday reported 3.5% distribution growth for the six months ended February, but remains confident it will achieve its target distribution growth of between 7.6% and 11.1% for the full year ended August.
CEO Sisa Ngebulana said the fund, which was establishing itself in the mid-cap market after listing two years ago, was now well positioned and had "very good prospects ".
He said Rebosis’s total return to linked unitholders for the 12 months ended February was 30.1%, comprising a 9% income return and 21.1% capital return.
The fund had reduced gearing in the period to 22.6% from 37.9% thanks to a R650m oversubscribed rights offer. Gearing was now at a "very comfortable" level, which gave the fund "headroom to move quicker on deals and close good-quality deals".
This was important as quality assets were trading quickly in the market due to opportunities being "few and far between".
Mr Ngebulana said Rebosis’s defensive portfolio was shielded from the tough economic environment as its offices were mostly let to government tenants who held long leases and the fund’s retail portfolio had a strong blue-chip national tenant profile.
By value, the portfolio comprises 52% shopping centres and 48% office buildings, and Mr Ngebulana said the fund was targeting a portfolio that was two-thirds retail by value and income.
During the period, the fund reduced vacancies from 3.7% in the comparable period to 2%, "which I think is the best in the industry, and we are still hoping to improve". The fund acquired quality assets worth R1.76bn during the period, which will see the portfolio increase from R4.6bn to just under R6.4bn.
Rebosis was established by property development and investment company Billion Group, and has the option to acquire Billion assets when they are developed for the market.
Alternative Real Estate fund manager Maurice Shapiro said like-for-like interim distribution growth of 3.5% "was below market consensus, but management had reaffirmed that full-year guidance was achievable between 92c and 95c per linked unit", representing growth of 7.6%-11.1%.
"Their recent acquisition of Sunnypark Mall should transfer in May and support full-year earnings," Mr Shapiro said.
Leon Allison, an analyst at Macquarie First South Securities, said Rebosis had achieved "a decent result — the portfolio seems to be performing well".
"Distribution growth may seem a bit disappointing but one needs to look at the full-year guidance," he said.
"Organically, they should be able to show decent growth from their retail portfolio, which is still in a growth phase, and acquisitions can add to that as well. It will be important what acquisitions they make, how well they bed them down, and what prices they pay for those acquisitions."
