JSE-listed Rebosis shares leap on the firm's R6.32 billion office portfolio deal
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JSE-listed Rebosis Property Fund’s A and B shares leapt on Friday after it said it had entered into a sales deal with Ulricraft, a special purpose vehicle (SPV) owned by Vunani Capital Partners (VCP), which could see the debt heavy firm dispose of its commercial office portfolio for R6.32 billion.
The company announced the deal in a late JSE Sens statement on Thursday as the markets closed.
Rebosis B shares on Friday closed at 28c, 3.7 percent higher, after rising to an intraday high of 31 cents, nearly 14.8 percent up.
Rebosis A shares on Friday closed at 95c, closing 18.75 percent higher after leaping to an intraday high of 119c, nearly 49 percent higher.
Rebosis founder and chief executive Dr Sisa Ngebulana said,“ This is an important milestone as part of our road map to deleverage the balance sheet. It crystallises value for shareholders and repositions Rebosis as a well-capitalised, retail dominant REIT with solid growth prospects, paying consistent distributions to shareholders.”
VCP is a company listed on Equity Express Securities Exchange.
Rebosis said in a statement on Friday, “It must be noted that while VCP is currently the owner of all of the issued share capital of the purchaser, upon fulfilment of all conditions precedent, it is expected that VCP will only own between 6 percent and 9 percent of the purchaser, with the balance being owned by other equity funders.”
The company is burdened with a relatively high level of debt with loan-to-value (LTV) at 72.2 percent at the end of February - generally, the market is comfortable with LTVs of 50-40 percent. In April it announced negotiations were underway with undisclosed, local and offshore parties on a potential transaction that could take LTV to below 40 percent.
On Friday it said that proceeds from the disposal would be used to pay down debt from a current R9.4bn to R3bn, which would substantially deleverage Rebosis’ balance sheet.
Subsequent to the transaction, Rebosis’ LTV was expected to reduce to approximately 42 percent from the 72.2 percent reported for the six months ended February, 28, 2021, in line with acceptable loan-to-value levels for REITs, it said.
The transaction was subject to several conditions precedent including the successful completion of a due diligence by the SPV, regulatory approvals and approval by Rebosis’ shareholders.
Rebosis’ commercial portfolio includes 35 buildings and one industrial property of which 32 will be disposed of, 15 of these assets are held directly be Rebosis and were independently valued at R3.64bn, including some iconic buildings such as 11 Diagonal Street, known as the “diamond building” in Johannesburg.
A further 17 assets in Rebosis’ subsidiary, Ascension Properties, independently valued at R1.99bn were also included in the disposal transaction.
Most of these assets are let by various government entities and parastatals, providing a defensive underpin. Three of the office assets were currently being converted into purpose-built student accommodation.
On successful conclusion of the transaction, Rebosis said it would be repositioned as a retail focused fund valued at R7.5bn, comprising five dominant retail malls and four office/retail/other assets.
It would have a strong balance sheet and a loan-to-value ratio of approximately 42 percent. The company would have the ability to resume dividend payments to shareholders, the firm said.
In a pre-close update last month Rebosis said the immediate outlook for listed property remained uncertain as new variants of the Covid-19 virus were being identified, with possible further waves of the pandemic potentially leading to stricter lockdowns.
The annual results for the year to August 31 were expected to be released on or about November 26.
BUSINESS REPORT ONLINE