JSE-listed Rebosis on Tuesday said its retail and office portfolio delivered 6.8% net property income growth in the six months ended February 26, 2018, with positive rent uplift on renewals that indicate good property fundamentals.

The company’s value in the underlying portfolio grew by 17.9% to R18.9-billion in the six months under review, with like-for-like growth in the underlying retail portfolio having amounted to 7.1% year-on-year, while growth in the commercial portfolio was 5.5% and growth in the industrial portfolio 7%.

Rebosis has a high-quality diversified portfolio across commercial and retail assets, with the majority of the commercial income enjoying a sovereign underpin from leases to national government departments across 42 buildings.

Its portfolio has a mix of dominant shopping centres and newly-built shopping centres set to dominate in their nodes.

The company’s distributable income increased by 29.6% from R389.1-million in the prior period to R504.2-million for this reporting period.

The increase was mainly owing to the full consolidation of Ascension Properties.

The company’s property net income increased by 6.8% in line with market-related escalations, with the net cost to income ratio having increased from 15% to 16% as a result of higher rates and taxes.

The anticipated dividend from New Frontier Properties (NFP) decreased from R63.2-million in the prior period to R33.2-million in the current reporting period, resulting from the disposal of 29.9% of the shares held by Rebosis to a broad-based black economic empowerment consortium.

Fund management expenses increased considerably from R55.1-million in the 2017 interim period to R65.1-million, mainly owing to increased staff costs as bonuses to staff in the prior period were paid by the asset manager and not the fund.

Meanwhile, at February 28, Rebosis’ borrowings increased to R10.3-billion from R9.8-billion in the prior reporting period resulting from additional shares acquired in NFP and the funding of an acquisition by NFP in Dublin, Ireland.

The weighted average cost of debt decreased marginally from 9.4% to 9.3%, largely owing to the decrease in the Johannesburg Interbank Average Rate reference rate. There are currently hedge arrangements in place for 67.1% of the debt.

The loan to value increased from 45.7% to 48.3% as a result of the increased borrowings.

Regardless of the increases in debt, Rebosis stated that it is well positioned for future growth given its stable and defensive retail portfolio that comprises an 88% national tenant profile.

In addition, Rebosis will have a strong focus on operations with an accelerated focus on filling up the remaining vacancies at its newly acquired Forest Hill City mall, in Centurion, and Baywest mall, in Port Elizabeth.

There will also be a strong focus on balance sheet management to reduce gearing to below 35%, which will be achieved through an accelerated disposal of noncore office assets.

This, in turn, will also serve to achieve more retail bias on the remaining portfolio in line with the stated strategy of being a retail focused fund, the company said.