Thursday, 09 November 2017 10:33

Rebosis Property Fund FY2017 results - solid growth despite constrained economy

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Rebosis Property Fund, the JSE’s first listed black-managed REIT, sustained solid distribution growth for the year ended 31 August 2017. 

Andile_Mazwai_COO_Rebosis

The results were underpinned by a diverse portfolio of dominant retail assets and stable earnings growth through its commercial office portfolio, mainly let to government. In addition, Rebosis benefited from the full year contribution of Bay West and Forest Hill, two early stage, dominant regional retail centres acquired in September 2016 as part of a R5.2 billion acquisition. 

The Fund declared a total distribution of 128.35 cents per ordinary share, up 7.4% on the prior year’s total distribution of 119.45 cents per ordinarty share. 

Newly appointed Chief Executive, Andile Mazwai commented: “The solid distribution growth is mainly as a result of the diversified nature of our enlarged portfolio, as well as continued asset management initiatives and a conservative approach to risk management.

“During the year, we continued with our capital recycling programme, disposing of a noncore asset to the value of R115 million and converting the office building in Mahikeng to  a 633-bed student residence. 

“Our results were further supported by the internalisation of the management company, resulting in an additional saving of R27.9 million. 

“We further concluded the extension of our debt expiry profiles and entered into new interest rate hedges totaling R4.2 billion.”  

At the close of the reporting period, the Fund’s portfolio was valued at R18.71 billion and consisted of six retail assets contributing 42% of net income, 42 commercial offices contributing 57% of net income and an industrial asset, contributing the remaining 1% of net income. 

Continued letting management and marketing activities in spite of the constrained economy paid dividends, with overall trading density increasing by 4.0% across the retail portfolio.  

The Group indicated that it will continue to pursue disposal and optimisation opportunities in its commercial office portfolio, whilst the mixed-use precinct development of Baywest and Forest Hill is expected to drive further nodal expansion and sustainability. 

Mdantsane and Hemingways, two of the original assets in the portfolio have been earmarked for expansion and upgrades respectively, which is anticipated to result in valuation uplift and continued differentiation in their nodes. 

At the end of the reporting period, Rebosis announced that it reduced its interest in New Frontier Properties Limited from 67.6% to 36.0% to a special purpose vehicle owned by a South African broadbased black economic empowerment consortium.  

“The objective was to introduce additional shareholders to New Fronier Properties. It also means that going forward, Rebosis will equity account for its intereset in the company. 

“We remain very supportive of their recalibrated strategy post Brexit and are encouraged by the quality of their latest acquisition in Ireland,” concluded Mazwai.

Rebosis expects distribution growth per ordinary share for the 2018 financial year of between 4% and 6% above that of 2017, based on the current economic environment.   

Last modified on Thursday, 09 November 2017 10:42

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