The Citizen (Gauteng)

Turnaround is going well


- Suren Naidoo

Deferred its decision to pay out a dividend to year-end.

Rebosis Property Fund has a huge debt burden of R9.5 billion and a sector-high loan-tovalue (LTV) ratio of 72.2%, but its founder and chief executive Sisa Ngebulana is pinning his hopes on a rescue deal currently being negotiated with unnamed prospectiv­e new investors to significan­tly reduce both.

Speaking during the fund’s interim results presentati­on for the six months to the end of February on Tuesday, Ngebulana said the goal is to reduce the group’s LTV to below 40%.

He did not comment on how much Rebosis would need to slash its debt by, but the comment about LTV is noteworthy, considerin­g the group’s record gearing levels.

“Getting our LTV below 40% will be in line with market expectatio­n… We also want to get our ICR [interest cover ratio] to 2.5 times. We hope to get to these levels by our next results [for the full-year to end of August, traditiona­lly published in November],” said Ngebulana.

“We are making positive progress with local and offshore institutio­ns, with an investment objective to restructur­e and strengthen our balance sheet, lower the LTV and improve the ICR… We continue to trade under cautionary until a transactio­n closes,” is all he would add.

The fund’s ICR stood at 1.3 times at the end of its interim period.

Rebosis issued the cautionary on 7 April, advising shareholde­rs of talks underway with the prospectiv­e investors, but could not reveal details due to non-disclosure agreements.

“Shareholde­rs are advised that the company has signed non-disclosure agreements and [is] currently in negotiatio­ns with local and offshore institutio­ns and pension funds for a transactio­n that, if successful­ly concluded, could fundamenta­lly change the financial matrix of Rebosis and crystallis­e value for shareholde­rs,” the group noted at the time.

Meanwhile, Ngebulana talked up the group’s interim results on Tuesday, saying the turnaround is “ahead of expectatio­ns”, despite the ongoing effects of Covid-19.

“Covid continues to affect our retail portfolio… Entertainm­ent aspects, such as cinemas, ice rinks and games arcades, within our shopping centres remain a challenge… But we are seeing improvemen­t in the food and beverage and services sectors.”

Third wave

We are making positive progress

He warned a possible third wave of Covid-19 infections and further lockdowns could adversely impact the overall retail turnaround. Despite Rebosis’ high debt levels and LTV, Ngebulana said the group “continues to operate a robust business” and fulfil its debt obligation­s.

It is worth noting the group has not paid dividends for two consecutiv­e years due to its debt and liquidity issues that were a concern for the market even before Covid-19 hit.

For its latest interim results, Rebosis deferred its decision to pay out a dividend to its year-end.

The fund reported a 12.8% decline in like-for-like net property income – to R512 million before bad debt, Covid-19 reprieves and disposals. This was due to tough economic conditions, made worse by the pandemic.

Its normalised distributa­ble income before once-off items came to R184 million for the interim period.

The group’s distributa­ble income decreased from R22 million to a loss of R71 million.

 ??  ?? UNDER CAUTIONARY. Sisa Ngebulana, founder and CEO of Rebosis Property Fund. Picture: Supplied
UNDER CAUTIONARY. Sisa Ngebulana, founder and CEO of Rebosis Property Fund. Picture: Supplied

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