JSE-listed property loan stock, Rebosis today reported its unaudited Results for the six months ended 28 February 2013.
The company owns a high growth defensive portfolio of 12 quality properties that includes one of the largest retail centres in South Africa, Hemingways Mall in East London. Rebosis’ primary objective is to grow its portfolio and distributions by investing in high-quality retail and commercial properties yielding secure capital and income returns for unitholders.
On 27 March 2013, Rebosis declared an early distribution of 44,5 cents per linked unit for the six months ended 28 February 2013 which represents an increase of 3,5% on the distribution of 43,0 cents per linked unit for the comparable period. The early announcement and resulting early payment of the distribution was in terms of a commitment made pursuant to the rights offer implemented on 4 February 2013.
The increase in the unit price from R9,70 per linked unit at 29 February 2012 to R11,75 at 28 February 2013 together with a total distribution of 87,50 cents per linked unit for the 12-month period then ended provides a total return of 30,2% to unitholders.
Following the acquisition of the four commercial properties in mid-2012, the retail sector now contributes 53% of rental income while Hemingways Mall remains the dominant property in the portfolio, contributing 32% of rental income for the period under review. Net operating costs are down to 12,8% from 13,8% in the comparable period due to operational efficiencies achieved during the period.
The properties, which were valued by independent valuer Quadrant Properties (Proprietary) Limited, increased in value from R4,540 billion at 31 August 2012 to R4,637 billion at 28 February 2013. The portfolio has a total gross lettable area (“GLA”) of 295 716m², is located in Gauteng, the Eastern Cape, KwaZulu-Natal and North West Province and comprises 52% retail and 48% office buildings (by value).
The retail component includes three exceptional quality shopping malls delivering secure, escalating income streams underpinned by strong anchor and national tenants. The office portfolio consists of nine buildings which are well located in nodes attractive to government tenants. These are mainly let to the National Department of Public Works, under long leases providing for average escalations of 8,3%. The office portfolio represents a sovereign underpin to a substantial portion of the earnings and shields it from private sector risks such as tenant insolvency and default. Notwithstanding tough operating conditions in which tenants have the upper hand and are reducing their requirements for space, vacancies have reduced from 3,7% at 31 August 2012 to 2,0% at 28 February 2013.
On 14 March 2013, the company took transfer of the Antalis property (“Antalis”), a specialised single-tenanted, industrial warehouse with a GLA of 18 954m² for R120,0 million. Antalis is strategically located in a light industrial node in Selby, Johannesburg with great connectivity to key highways and provides additional bulk for future tenant-driven expansions which will further diversify the company’s income streams.
During the reporting period, Rebosis concluded agreements for the acquisition of a high quality and well established retail centre, Sunnypark Mall in Pretoria for R576,7 million, and the Nthwese office portfolio for R1,06 billion.
The Sunnypark Mall is a dominant centre located in the resurging suburb of Sunnypark in Pretoria. The centre, which has recently had a major refurbishment, has a GLA of 28 072m² and comprises in excess of 75% of national retailers.
The Nthwese portfolio comprises four recently refurbished quality properties in Johannesburg and one in Pretoria let to Gauteng provincial government and national government, respectively, on long-term leases. The 67 952m² portfolio is currently virtually fully occupied.
On 4 February 2013, Rebosis successfully raised R650 million in terms of a rights offer that was oversubscribed. In term of the offer, 58 035 718 new linked units were issued at a price of R11,20 per unit increasing the total number of units in issue to 307 183 417. The issue price effectively included an accrued distribution of 38,6 cents for the period 1 September 2012 to 4 February 2013. Excluding the accrued distribution, the rights offer linked units were issued at a price of R10,81 per linked unit
The purpose of the rights offer was to enhance Rebosis’ ability to take advantage of pipeline acquisition opportunities and to strengthen its balance sheet, thereby improving its ability to use cash to effect acquisitions.
Rebosis’ net borrowings of R1,048 billion at 28 February 2013, which have been reduced by the proceeds of the rights offer, equate to a gearing ratio of 22,6%. In line with the company’s hedging policy. 77,5% of borrowings have been fixed resulting in an average cost of borrowing of 8,5% for the period under review. The average remaining term of the debt is 2,5 years.
Despite the tough economic conditions, vacancies and operating costs have reduced and there has been a strong increase in interest for space in our retail properties from national and international retailers.
The board is confident that Rebosis is well-positioned to capitalise on future high quality growth opportunities that are currently being assessed by the company.
Further, the board is confident that Rebosis is still on track to achieve a distribution of between 92 cents and 95 cents per linked unit for the year ending 31 August 2013, in line with our previous forecast announced on 24 October 2012. This is based on the assumption that there will be no change in current trading conditions of the existing portfolio, a stable macro-economic environment will prevail, tenants will be able to absorb rising utility costs, there will be no major corporate failures and that Sunnypark and the Nthwese office portfolio will be acquired effective 1 May 2013. This forecast is the responsibility of the directors of Rebosis and has not been reviewed or reported on by the company’s auditors.
Debenture interest distribution
Distribution No. 4 of 44,5 cents per linked unit for the six months ended 28 February 2013 will be paid to linked unitholders on Monday, 22 April 2013.