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Rebosis Property Fund continues to bulk up its portfolio

Posted On Friday, 25 April 2014 18:03 Published by
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Rebosis Property Fund continues the property sector's better than expected earnings streak.

Sisa Ngebulana

Empowerment player Rebosis Property Fund (REB)‚ which was listed on the JSE three years ago by lawyer turned developer Sisa Ngebulana‚ has continued the property sector's better than expected earnings streak.

The company‚ which is involved in takeover talks with fellow empowerment stocks Delta Property Fund and Ascension Properties‚ on Thursday reported a 9% increase in income payouts for the six months ended February‚ up from 7.6% growth for the year ended August 2013. Distributions for the interim period increased from 44.50c to 48.50c per linked unit.

Rebosis owns four shopping centres‚ including Hemingways Mall in East London‚ Sunnypark Mall in Pretoria‚ and government-tenanted offices in the Pretoria and Johannesburg central business districts.

Mr Ngebulana said yesterday that Rebosis would continue to bulk up its portfolio‚ which has ballooned from seven properties worth R3.3bn at listing in May 2011 to 19 properties worth R6.6bn today. The company's next big growth spurt will come via the proposed three-way merger with Delta and Ascension.

They entered into merger talks in February after it came to light that Rebosis and Delta were vying for control of Ascension. Rebosis was in effect the winning suitor when it acquired Ascension's management company for R150m‚ and a 29% stake in Ascension's B units for R289m.

"Consolidation has now become a reality for smaller players and we think a merger of the three stocks makes strategic sense‚ especially seeing that we have similar objectives for our respective funds‚ '' said Mr Ngebulana.

He said a merged portfolio would create the largest black-managed and substantially black-owned property stock on the JSE‚ with assets of about R18bn and a combined market cap of close to R10bn. This places Rebosis among the sector's top 10 funds in terms of size.

Mr Ngebulana said the due diligence process was under way. "We hope to conclude the merger by September/October." Stanlib portfolio manager Ndabe Mkhize said it supported the merger as it should lead to strong economies of scale‚ eliminating superfluous costs and enabling Rebosis to negotiate better capital market access and lease terms with government tenants.

Its 9% distribution growth performance is ahead of the sector average of 8% seen so far this year. Analysts said Rebosis's solid results were underpinned by a 2% vacancy rate‚ yield-enhancing acquisitions‚ a decrease in funding costs and continued operating efficiencies across the portfolio.

Sesfikile Capital director Mohamed Kalla said the company's shopping centres performed particularly well given South Africa's sluggish retail environment amid rising interest rates. The Hemingways Mall‚ saw turnover growth of a 10.5% for the six months to February year on year.

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