Rebosis holds back on dividend as it pays down debt


Rebosis holds back on dividend as it pays down debt

Published Date: 2019-05-15 | Source: Stephen Gunnion | Author: Stephen Gunnion

Rebosis holds back on dividend as it pays down debt

The real estate investment trust had a tough first half, impairing the value of its UK investment by close to R2 billion.

Rebosis Property Fund has slashed the value of its investment in UK shopping centre owner New Frontier Properties by close to R2 billion following a tough first half. As a result, it's decided to pay down its debt and is holding back on an interim dividend. Holders of its B shares will get a much-reduced full-year payout but holders of its A units will get still get their guaranteed distribution growth of 5%.

The real estate investment trust (REIT) has also written down the value of a loan to a BEE consortium and has adjusted the value of its investment portfolio. As a result, its loan-to-value has increased from 51.6% last August to 57.1%.

Rebosis said trading conditions remained difficult in the retail sector in the six months to end-February, while the uncertainty around Brexit in the UK and last week's elections also created a difficult trading environment.

Revenue fell 20% to R953 million and operating profit declined by 31% to R600 million. It reported a R2.02 billion loss for the period, down from a profit of R343 million last year. Distributable income fell by 61% to R195 million - of which R96 million was as a direct result of New Frontier Properties. On top of that, finance costs increased by R97 million due to lower income from cross-currency swaps, higher average debt levels and higher borrowing costs. It said the loss of rental warranty income of R42 million and rate rebates of R24 million further reduced distributable income.

On Monday, the fund announced the sale of three retail properties, including the Mdantsane City Shopping Centre, the Sunnypark Shopping Centre and the Bloedstreet Mall to Vukile Property Fund for R1.78 billion. It said the proceeds would be used to reduce debt in line with its intention to reduce its loan-to-value ratio. It said it had experienced delays in the planned disposals of its office portfolio. It said reducing the ratio would help lower the cost of funding and strengthen its balance sheet, resulting in an improved credit rating.

Last week it said full-year distributable income was likely to be between 52% and 62% lower than last year, resulting in a decline of between 74% and 76% in the full-year dividend for its B shares.

Its B shares closed 6.3% higher at R1.35 yesterday while the A shares gained 4.5% to R19.

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