Rebosis Property Fund, the JSE’s first listed black-managed REIT,has announced a watershed R6 billion transaction that will substantially increase the Group’s exposure to high-quality retail assets and significantly bolster its scale and liquidity.
In terms of the announcement, Rebosis concluded a binding heads of agreement with Billion Group (Proprietary) Limited (“Billion Group”) (wholly owned by the Amatolo Family Trust) that will see Rebosis acquiring 100% of Baywest City (the largest shopping mall in the Eastern Cape), Forest Hill City (a large regional shopping mall that dominates in Monavoni, Centurion, Gauteng), as well as a 50.1% interest in BT Ngebs City, the largest and dominant shopping mall in Mthatha (4th largest mall in the Eastern Cape).
In addition, Rebosis will acquire Billion Asset Managers (Proprietary) Limited as well as Billion Property Services (Proprietary) Limited, effectively internalizing the asset management and property management companies of the Group.
Commented Rebosis Chief Financial Officer, Kameel Keshav:
“Transactions of this nature are very rare. These are very large dominant regional shopping centres that will significantly increase our scale and liquidity as well as the quality of the overall portfolio”.
“The acquisition represents a watershed moment in Rebosis’ history, that will see the company’s total assets under management grow to R18.6 billion and at our current share price, raise our market capitalization to around R8.3 billion”.
“Key shareholders have been engaged in finalizing the fundamentals of the transaction and the immediate financial effects. Despite the immediate dilution, most shareholders have been very supportive of the transaction and requisite support in favour of the acquisitions will be achieved.”
The proposed transaction will result in CEO and founder Sisa Ngebulana’s stake in Rebosis growing to approximately 20% including deferred payments.
Post the transaction, Rebosis will hold seven prime retail assets with an approximate value of R9 billion, representing 66% of its total asset value.
“This enhanced scale is expected to increase liquidity for investors, increase our weighting in the JSE’s SAPY index and drive down operational costs through economies of scale,” commented Keshav.
“The internalization of the asset management and property management companies will better align the interest of management and shareholders. At the same time a material component of the value obtained from the service businesses by Billion will be utilized to
create a share incentive scheme for Rebosis staff. This structure will allow us to appropriately motivate and reward staff strategic to improving the overall growth of the portfolio and our distributable income with no additional cost to existing shareholders,” he added.
The Billion property portfolio comprises a combined gross lettable area of 191 801 m2 and was independently valued at R5.4 billion. The weighted average lease period of these early stage centres is 8.1 years with an average escalation of 7.1% per annum. The centres are trading exceptionally well, with trading densities of R25 971/m2 reported by Forest Hill City (up 27.4% on the prior year) and Baywest City reporting R24 308/m2 on an annualized basis. Similarly, BT Ngebs City reported a trading density of R23 731/m2 on an annualised basis. These represent remarkable densities for first year trading.