Founder returns in bid to revive group

Rebosis, which listed in 2011, was the most highly black-managed and held property company on the JSE for a number of years.

But the group is struggling, trying to sell down its office portfolio to reduce debt and having to slash its upcoming dividend payout.

It was established by the Billion Property Group in 2010 and listed in May 2011. Since the listing Billion has developed a number of assets and then sold them to Rebosis. It was also Rebosis’s property and asset manager until these functions were internalised.

At the time of listing, Rebo- sis’s property portfolio was valued at R3.3bn. The group now owns R19bn worth of assets.

CEO and founder Sisa Ngebulana is trying to cement the company’s strategy as being foremost a retail property owner.

This shift began about two years ago when Ngebulana decided he needed to divest from offices and a number of sovereign underpinned assets.

But this has proved more difficult than expected and the group is taking longer than it wanted to dispose of selected offices in 2018. It needs to sell offices to reduce debt.

Rebosis has targeted getting its debt or loan-to-value level to 32.7% by the end of December. At the end of February, when it last reported financial results, its loan to value was 48.3%. In November it will release financial results for the year to August.

About 50.5% of its total portfolio is office and close to 50% is retail. About 1% is industrial.

Ngebulana wants his fund’s portfolio to be 80% retail and 20% office in a few years.

He returned to his CEO role after his successor, Andile Mazwai, suddenly left in April. Mazwai had wanted Rebosis to own a mix of property types and did not agree that it needed a heavy bias toward retail.

Ngebulana, an Eastern Cape real estate entrepreneur, had wanted to retire from Rebosis and develop in that province. But he’s now entrusted with turning Rebosis around.

Things have remained difficult since his return.

Rebosis said it would cut the dividend for the six months to August by as much as a quarter compared with a year earlier, citing the negative effects of once-off accounting items on its income.

Rebosis has a dual capital structure with A and B shares which suits investors with different risk profiles. Rebosis A shareholders are guaranteed distribution growth of 5% and are paid first. B shareholders are paid the residual.

The dividend-cut announcement saw Rebosis’s B share price plunge 6.8%.

The company advised that the dividend per Rebosis B share for the six-month period to August 2018 was expected to be 50.66c-54.04c, between 20% and 25% lower than the 67.55c for the comparative six months ended August 31 2017.

Ngebulana said Rebosis had identified “once-off items” that were holding the fund back from achieving its potential.

Rebosis would account for these items at once, instead of over time, and in this way remove “some uncertainty from the stock”. It could then to return to positive dividend growth soon after.

Rebosis’ B share is down nearly 34% year to date.