Baywest leads Rebosis’ strong retail performance
In April Rebosis Property Fund reported a net property income growth of 74,6% for the six months ended 28 February 2017. A JSE listed Real Estate Investment Trust (REIT) Rebosis’ strategy is directed toward dominant retail malls.
The company’s Chief Operating Officer, Andile Mazwai, said: “We saw strong retail performance despite a depressed retail sales environment. This performance was largely led by Baywest Mall, which held the highest trading density growth at 11.6%, and Bloed Street Mall. Alongside this performance we reduced our retail vacancies to 1.5% in the reporting period.”
Rebosis’ South African retail portfolio makes up 62% of its South African assets and consists of six high-quality, dominant shopping malls with strong anchor national tenants delivering income streams escalating at 7,4%.
Expanding on this solid performance, Rebosis plans to embark on extensions to its Mdantsane Mall in Pretoria, as well as implement a R55 million upgrade to Hemingways Mall in East London.
Rebosis concluded the watershed R5 billion Baywest Mall (Port Elizabeth) and Forest Hill City (Pretoria) acquisition during the reporting period and at the same time internalised its asset and property management entities. This gave rise to the increase in market cap growth and share price appreciation and saw the fund achieve its stated objective of becoming a retail-focused fund with an internalised management function.
Rebosis’ Chief Executive Officer, Sisa Ngebulana, said, “We achieved exciting growth in both total assets and income during the 6-month period under review. We were also able to hedge 100% of our debt and extend debt maturity profiles in order to mitigate potential risks that arise as a result of a market downgrade and low economic growth. To have achieved a 38% increase (74.6% including new mall acquisitions) in net property income while reducing our overall vacancies to 2.4% bears testament to our defensive office-sovereign underpin and the dominant retail strength in the portfolio, which we believe will continue to perform well in a sluggish economic environment.”
The retail portfolio delivered a strong 6% trading density growth and the fund’s remaining industrial property is presently under offer and is being held for disposal.
Further detail of Rebosis performance reveals that total distributable income increased 32,7% to R389 million from R293 million over the period. Following various acquisitions during the period, assets under management rose a significant 51% to R17,9 billion from R11,8 billion.
A dividend of 60,08 cents per share has been declared for the six month period. This amounts to 7,07% dividend growth year-on-year, which is in line with the 7% to 9% guidance expected for the financial year.
Rebosis also concluded the acquisition of Ascension Properties which led to the listing of the Rebosis-A shares at a market capitalisation of R1.6bn (thus giving Rebosis a combined market capitalised value of R9.8bn). The Rebosis A-shares were listed on the JSE on the 19th of April 2017.
The completion of this acquisition consolidates Ascension Properties under Rebosis’ direct properties and has bolstered the Rebosis asset portfolio by a further R17.9 to R21.3bn.
The combined SA properties now constitute 8 retail shopping malls, 42 office buildings and two industrial properties.
The commercial properties are located in nodes attractive to government tenants and are mainly single-tenanted buildings let to the National Department of Public Works, providing for average escalations of 8,2%.
The dividend growth in the period is in line with the Rebosis Board’s view that the dividend per share will grow by between 7% and 9% for the full year to 31 August 2017, provided there are no unexpected or drastic deteriorations in the South African economy.
This forecast outlook is issued by the Board, and has not been reviewed or reported on by the company’s auditors.
Rebosis also holds 67,5% in New Frontier Properties which owns the dominant shopping centres in the English towns of Blackpool, Middleborough and Burton-on-Trent.