Rebosis outlook remains confident

Chief executive Sisa Ngebulana said the fund, which is establishing itself in the mid-capitalisation market after listing two years ago, had "very good prospects".

He said Rebosis's total return to linked unit-holders for the 12 months ended February was 30.1%, comprising a 9% income return and 21.1% capital return.

The fund had reduced gearing in the period to 22.6% from 37.9% thanks to a R650m over-subscribed rights offer. Gearing was now at a "very comfortable" level, which gave the fund "room to move quickly and close good-quality deals".

This was important as quality assets were trading rapidly in the market because opportunities were "few and far between".

Ngebulana said Rebosis's defensive portfolio was shielded from the tough economic environment as its offices were mostly let to government tenants, which held long leases. The fund's retail portfolio had a strong blue-chip national tenant profile.

By value, the portfolio comprises 52% shopping centres and 48% office buildings and Ngebulana said it was targeting a portfolio that was two-thirds retail by value and income.

During the six-month review, the fund reduced vacancies from 3.7% to 2%.

Vacancies reduced

Ngebulana said be believe the reduction was the best in the property sector and added that Rebosis was still hoping to improve on that figure. The fund bought assets worth R1.76bn during the period, which will see the portfolio increase from R4.6bn to just under R6.4bn.

Rebosis was established by property development and investment company Billion Group and has the option to acquire Billion assets when they are available.

Alternative Real Estate fund manager Maurice Shapiro said like-for-like interim distribution growth of 3.5% "was below market consensus, but management had reaffirmed that full-year forecast of between 92c and 95c per linked unit was achievable" representing growth of between 7.6% and 11.1%.

"Their recent purchase of Sunnypark Mall should be transferred in May and support full-year earnings," Shapiro said.

Leon Allison, an analyst at Macquarie First South Securities, said Rebosis had achieved a decent result and that the portfolio seemed to be performing well.

"Distribution growth may seem a bit disappointing but one needs to look at the full-year forecast," Allison said.

"Organically, the fund should be able to show decent growth from their retail portfolio, which is still in a growth phase, and acquisitions can add to that as well. It will be important what acquisitions they make, how well they bed them down, and what prices they pay for those acquisitions," he added.

Source: Business Day via I-Net Bridge