– 8.2% distribution growth to 119.45 cents per share.
– Growth in direct assets under management by 29,5% to R12.8 billion.
– Net property income growth of 10.3%.
– Reduction in vacancies to 3.1%.
– Reduction in cost-to-income ratio from 13.3% to 12.5%.
– Rebosis loan to value reduced to 34.7%.
Rebosis Property Fund sustained strong distribution growth for the year ended 31 August 2016. The results were underpinned by a defensive portfolio of dominant retail assets and stable earnings growth through its commercial office portfolio, mainly let to government. In addition Rebosis’ investment property portfolio consisting of UK based New Frontier Properties and local commercial office specialist, Ascension Properties further bolstered earnings.
The Fund declared a final distribution of 62.66 cents per share, in addition to an interim dividend of 56.79 declared in February 2016, amounting to a total distribution of 119.45 cents per share for the year under review, up 8.2% on the prior year’s total distribution.
Rebosis Chief Executive, Sisa Ngebulana commented: “The solid distribution growth is mainly as a result of continued organic growth in our existing portfolio as well as the management team’s containment efforts which saw our cost to income ratio reduce from 13.3% to 12.5%”.
“We have achieved these results despite increased cost of debt from 8.2% to 8.9% due to extended debt and interest hedges taken over a four year profile”.
“Going forward we will continue to execute our strategy of building a retail focused, resilient portfolio that yields strong income and capital growth for our shareholders.”
At the close of the reporting period, the Fund’s direct assets under management were independently valued at R12,8 billion (2015: R9.8 billion). The effective investment in Ascension and New Frontier was valued at R3.9 billion (2015: R2.7 billion).
The investment portfolio for the Group (including Ascension and New Frontier) consists of 51 assets (20 properties excluding Ascension and New Frontier) made up of 45% retail, 51% commercial offices and 4% industrial, by Gross Lettable Area.
Since listing, Rebosis has held a right of first refusal on any asset coming to market by Billion Property Group (Pty) Limited provided that these assets match the Fund’s investment criteria. Consequently, with effect from 3 October this year, Rebosis acquired 100% of Forest Hill City and Baywest Mall, two large, dominant, early stage retail centes located in Centurion and Port Elizabeth respectively. As part of the transaction, Rebosis also acquired Billion Group’s asset and property management companies, effectively internalizing the Company’s asset manager. The transaction was voted by an overwhelming level of support of 88% by shareholders on all resolutions.
The acquisition price totaled R4.9 billion and will be settled by new debt facilities of R3.7 billion and an equity raise of R1.2 billion (R700 million of which is deferred over two years at R350 million per year.) Rebosis plans to settle R1.5 billion of the new debt through the disposal of non-core commercial assets.
“We received tremendous shareholder support to acquire these high-quality assets, that has transformed our portfolio into a retail dominant Fund. Retail, and especially regionally dominant retail centres, generally outperform and are hence more defensive in tough economic conditions,” commented Ngebulana.
“We are cognizant of the economic headwinds the country faces, and as such we’ll focus on improving the quality of our portfolio and strengthen our balance sheet through targeted disposals of non-core commercial assets. This will reduce gearing and furthermore position us well for any new accretive opportunities,” Ngebulana concluded.
Rebosis expects distribution growth for the 2017 financial year to be between a forecasted range of 7% to 9% above that of the 2016 financial year.