Rebosis unable to pay dividend
Rebosis Property Fund, the first such black-owned and managed fund to list on the JSE in 2011, says it cannot pay dividends as it does not have the cash. Posting results on Thursday, the company said it did not declare a dividend for the financial year to end-August after performing a solvency and liquidity test.
Rebosis Property Fund, the first such black owned and managed fund to list on the JSE in 2011, says it cannot pay dividends as it does not have the cash.
Posting results on Thursday, the company said it did not declare a dividend for the financial year to end-August after performing a solvency and liquidity test.
“This test was performed and based on management’s assessment the company is currently solvent but not liquid and therefore unable to make payment,” it said.
From the end of August 2019 to the end of August 2020, Rebosis cash and cash equivalents fell 18% from R72.157m to R59.233m.
Revenue for the year to end August fell to R1.7bn from R1.8bn. Like other property companies with exposure to retail tenants, Rebosis was hit by the lockdown as some of its clients could not trade. This affected rent income.
At end-August, company assets included five shopping centres worth R6bn, 36 offices worth R7.1bn and one industrial asset worth R96m. Its retail portfolio has a mix of shopping centres including Baywest Mall in Port Elizabeth and Forest Hill City in Centurion.
Rebosis has been selling a number of assets to decrease its loan-to-value (LTV) and to raise cash.
LTV measures the ratio of a company’s debt and its assets. SA fund managers prefer property companies’ LTVs not to exceed the 35%-40% range. Many of these fund managers have criticised certain real estate investment trusts (Reits) for having LTVs well in excess of 40%.
The listed property sector’s average LTV is currently 42% according to Keillen Ndlovu, head of listed property funds at Stanlib.
Yet, given that the total carrying value of investment property in the current financial year was R13.16bn and the company’s net debt was R9.5bn, Rebosis’ LTV was 72.4% at the end of the reporting period.
During the period, proceeds from the disposal of Mdantsane Shopping Centre were used to settle debt with Nedbank to the value of R491m.
Rebosis said in a statement that it remains “confident on the office portfolio given its defensive nature and this will mitigate the risk from the retail portfolio”.
The group said its objective will be to continue to assist the small businesses to ensure “continuity into the future through sensible rent concessions”.
The company said the lack of growth in the economy, now worsened by the Covid-19 impact, will continue to negatively affect the retail environment, “more so the weak currency that implies higher input cost to retailers and lesser margins on products, leading to a squeeze on landlord rentals”.
Rebosis’s focus will be on achieving good lease renewals and filling vacancies.