Tough trading conditions in the property sector had a significant negative impact on JSE-listed Rebosis Property Fund's results for the six months ended February 29.
The group recorded a decline in net property income, relating to reversions and the loss of income from disposed properties. Property expenses also increased, owing to additional estimated credit loss allowances that were raised.
A fair value writedown of R1.7-billion was processed, reducing the carrying value of the commercial properties by 7% to R7.2-billion and the retail portfolio by 21% to R6.2-billion.
Total assets amounted to R14.1-billion for the period.
For the period, the group’s portfolio weighted average lease expiry was 3.1 years; portfolio vacancy was 7.1%; retail trading density growth was 6.5%; and retail footfall growth was 1.9%.
For the period, revenue was R924 181.
The Rebosis board has resolved not to declare an interim dividend and no dividend was declared in the prior interim period.
Meanwhile, Rebosis on June 29 said lower interest rates would have a material positive impact on the fund given its debt levels. It noted that this would continue to lead towards a much improved interest cover ratio and better returns for shareholders.
“We remain confident on the office portfolio given its defensive nature and this will mitigate the risk from the retail portfolio.”
The negative impact of Covid-19-related lockdown measures had affected collections from impacted retailers on the group’s retail portfolio, with 73%, 78% and 88% overall collection rates in April, May and June respectively.
While Rebosis was expecting higher collection rates going forward, it warned that the food, beverage, services and entertainment sectors may not recover, which would impact on the company.
Rebosis plans to continue to assist the small businesses to ensure continuity into the future through sensible rent concessions.
The lack of growth in the economy, now exacerbated by the Covid-19 impact, would continue to negatively affect the retail environment, more-so the weak currency that implies higher input cost to retailers and lesser margins on products, leading to a squeeze on landlord rentals, said the group.
Its focus will be on achieving good lease renewals, vacancy fill ups that are more informed by innovative repositioning of the offerings in its retail centres in line with global trends.
Rebosis said it would continue deleveraging its balance sheet to achieve an optimal capital structure through asset disposals at good value with some imminent transactions in progress.