JSE-listed black-managed Rebosis Property Fund would move its focus to planned expansions and tenant mix optimisation, after starting the new financial year on “good footing”, said CEO Sisa Ngebulana on Wednesday.

Rebosis, on the back of continuing strong demand for space, aimed to reposition its “crown jewel” Hemingways Mall, in East London, and the Bloed Street Mall, in Pretoria, during 2014 as “ultimate destinations” geared for future growth.

The Hemingways Mall, which opened in East London in 2009 and boasted a gross lettable area (GLA) of nearly 80 000 m2, and the 25 760 m2 Bloed Street Mall were currently undergoing expansions and optimisations that would yield critical mass tenants and boost the number of brands represented in the shopping centres.

The R120-million Hemingways optimisation, which would see Edgars expand its retail space from 3 500 m2 to 6 500 m2, besides others, kicked off in August and was expected to be completed by the end of May next year.

The tenant optimisation of the Bloed Street Mall, which the group bought for R341.5-million last year, would cost R64-million and included redevelopment at the commuter centre to link the east and west centre blocks across Lilian Ngoyi street.

The redevelopment started in February and would be completed by August 2014.

Rebosis forecast a distribution of between 97c and 99c a linked unit for the year ended August 2014, after taking into account the expected short-term dilution from the planned expansion and tenant-mix optimisations of the retail centres.

The projected distribution, Ngebulana told Engineering News Online, was in line with industry’s growth of between 5% and 7%.

During the 2013 financial year, Rebosis delivered a distribution per linked unit of 92c, a 7.6% increase on the prior year’s distribution of 85.5c a linked unit.

Rebosis attributed the distribution growth to the contribution from escalated rentals, gearing effect and operating cost efficiencies.

“Demand for space remains strong, vacancies in the portfolio have remained at low levels and operating costs are well managed,” said Ngebulana.

He told Engineering News Online that Rebosis currently had a vacancy rate of 1.2%, well below the industry norm of 3%.

Further, operating efficiencies had improved the net operating cost ratio from 13.5%, in 2012, to 12.5% in the 2013 financial year.

Rebosis, which started trading under the Real Estate Investment Trusts structure on the JSE’s main board on September 1, reported that group revenue increased 26.2% to R522.8-million during the year to August, with retail accounting for 54%.

During the 12 months to August, Rebosis spent R1.76-billion, at a yield of 8.8%, to add 114 978 m2 in GLA to its portfolio, “which will see the portfolio increase from R4.6-billion to around R6.4-billion, entrenching our position as a mid-cap in the sector,” Ngebulana explained.

Rebosis bought the Pretoria-based Sunnypark Mall, which had a GLA of 27 697m², in June, for R587.5-million.

The R120-million acquisition of the Antalis property, with a GLA of 18 954 m², in March, introduced the first industrial warehouse to Rebosis’ portfolio.

The company also concluded acquisitions – the last in September – of the 67 952 m² fully let Nthwese portfolio for R1.06-billion, comprising four recently refurbished and government-tenanted properties in Johannesburg and one in Pretoria.

The property group had also successfully raised R1.1-billion through a R650-million oversubscribed rights offer, in February, and a further R475-million by way of an accelerated one-day book build, in August.

“The fund decreased gearing levels from 37.1% to 25.3% as a result of the successful rights offer and accelerated book build completed during the year,” Ngebulana said.

“Gearing is now at a comfortable level which provides us with enough headroom to move quickly on good quality transactions. The increased market capitalisation also positions the fund well to access debt capital markets.”