JSE-listed black-managed Rebosis Property Fund expected the Competition Commission to approve its acquisition of the Sunnypark Centre, in Pretoria, within the next week, while transfer was anticipated in the third week of May, CEO Sisa Ngebulana said on Thursday.

The deal was among agreements concluded to acquire what he referred to as “a number of yield-enhancing properties” during the six months ended February 28, which had a total gross lettable area (GLA) of 114 753 m² for R1.76-billion.

“During the period, we successfully introduced an additional R1.76-billion of new properties into the portfolio, further diversifying the mix and geographical spread,” Ngebulana said, adding that the new assets were located in Gauteng, the Eastern Cape, KwaZulu-Natal and the North West province.

The acquisitions also included a portfolio of four government-tenanted offices, in Johannesburg and Pretoria, as well as the 18 954 m² Antalis industrial property, in Selby, Johannesburg, which formed part of the fund’s strategy to diversify it portfolio and was its first venture into the sector. The property was effectively transferred to Rebosis on March 14 and was tenanted under a long-term lease.

Ngebulana stated that the company’s strategy of growing its portfolio and distributions through investments in high-quality retail and commercial properties was delivering according to plan.

“Despite increasing pressure on consumer expenditure, turnover growth in the retail portfolio grew strongly at 10%,” he noted.

Following the acquisitions, Rebosis’ portfolio comprised 12 properties with a total GLA of 295 716 m². By value, the portfolio comprised 52% shopping centres and 48% office buildings. Rebosis' properties, valued by independent firm Quadrant Properties, increased in value from R4.54-billion at August 31, 2012, to R4.64-billion on February 28, this year.

The commercial offices, which were mainly let to national government departments, continued to underpin a large portion of the fund.

At Mdantsane City, in the Eastern Cape, and Bloed Street Mall, in Pretoria, 96% of leases had been renewed during the period under review. Ngebulana highlighted Rebosis’ focus on reducing its overall vacancy to below 2%, with 5 279 m² of new space being let and leases in respect of 4 103 m² having been renewed.

Letting activities, mainly in the retail portfolio, further increased the occupancy rate from 96.3% in the prior comparable period to 98% at the period end.

Meanwhile, a R64-million redevelopment project at the Bloed Street Mall was expected to start in the current period. The redevelopment would see the linking of the east and west centre blocks across Lilian Ngoyi street.

During the review period, Rebosis successfully raised R650-million through an oversubscribed rights offer at R11.20 a linked unit, which included an accrued distribution of 38.6c a linked unit for the period to February 4.

“The rights offer enhances our ability to take advantage of pipeline acquisition opportunities and further strengthen our balance sheet. It gives us the ability to use cash to conclude transactions, which puts us in a stronger position when negotiating,” Ngebulana added.

The proceeds of the rights offer reduced Rebosis’ net borrowings, with its gearing reducing from 37.9% in the comparable period to 22.6% for the period under review.

FINANCIAL PERFORMANCE

Rebosis achieved a headline profit of 61.29c a linked unit for the six months ended February 28, up 27.5% from the 46.09c a linked unit in the prior comparable period.

In terms of a commitment made by Rebosis pursuant to the successful rights offer, the firm, in March, declared an early distribution of 44.5c a linked unit for the period under review. This represented an increase of 3.5% on the distribution of 43c a linked unit for the prior comparable period.

The total return to linked-unitholders of 30% for the 12-month period ended February 28, comprised an income return of 9% and a capital return of 21.1%.

PROSPECTS

Although there were no plans to expand its portfolio beyond South Africa, Ngebulana said Rebosis would continue to optimise the retail offering in its malls and prudently manage costs during the second half of the financial year.

“During the period under review, we managed to bring down our net operating costs considerably,” he noted.

Further, Ngebulana indicated that Rebosis was well positioned for future growth, as its lower gearing allowed it headroom to move quickly on deals and its shopping centres and government-tenanted buildings traded well, while showing good growth.

He stated that Rebosis would enjoy exposure to high-quality regional centres from the Billion Group’s pipeline of development projects, which included Forest Hill, in Centurion, and Mthatha Mall and Bay West City, in the Eastern Cape, on which Rebosis had right of first refusal.

“We remain confident that we will achieve a targeted distribution range for the year ending August 31 of between 92c and 95c per linked unit, representing growth of between 7.6% and 11.1%,” Ngebulana added.