Rebosis rallies on investor talks

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Rebosis rallies on investor talks

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Published Date: 2021-04-08 | Source: Stephen Gunnion | Author: Stephen Gunnion

Rebosis rallies on investor talks

The property fund says a successful outcome could crystalise value for its shareholders.

Rebosis Property Fund's shares soared as much as 43% yesterday after it said it was in talks that could fundamentally change its financial matrix and crystallise value for shareholders. The real estate investment trust (REIT) has been struggling to raise capital and reduce its debt due to a tight financial position that has been exacerbated by Covid-19.

In a cautionary announcement, the real estate investment trust (REIT) said it had signed non-disclosure agreements with the local and offshore institutions and pensions funds over the deal it was negotiating. It said the proposed transaction would be subject to various regulatory approvals and the conclusion of formal agreements. If concluded, it would be classified as a category 1 transaction and would require the approval of shareholders. Under the JSE's rules, category 1 transactions include those where a company makes an acquisition or disposal which constitutes 25% or more of its market capitalisation.

Rebosis didn't pay a dividend for the year to end-August 2020 after a solvency and liquidity test, required under the Companies Act, found it was solvent but not liquid. After selling its Mdantsane City shopping centre to reduce debt, it said it was actively looking for ways to raise capital, including disposing of more assets. It also said there was a material uncertainty on its ability to continue as a going concern without the support of its lenders.

Income for the year was impacted by the pandemic and the resultant lockdowns, with distributable income before tax declining by 77% to R62 million due to concessions on its retail portfolio of R148 million including bad debt write-offs and changes in the expected credit loss allowances. After tax and other expenses, it reported a distributable loss of R36.3 million, down from earnings of R226 million previously. Finance costs decreased by R131 million after it used the proceeds from the Mdantsane sale to reduce debt owed to Nedbank by R491 million and as interest rates came down.

Its retail portfolio has a mix of shopping centres including Baywest Mall in Port Elizabeth and Forest Hill City in Centurion. With only essential services tenants trading last April, rent collections came under severe pressure. However, by August, its collection rate had improved to 95%.

The fund also announced yesterday that it had also appointed two additional non-executive directors, Mervyn Burton and Shaun Naidoo, to strengthen the independent capacity of its board of directors. Maurice Mdlolo had resigned from the board and as chairman of the investment committee with effect from 1 April.

Rebosis's 'B' shares retraced some of their gains to close 35% up at 31c. Its 'A' shares didn't trade, closing at 90c.





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