JSE-listed Rebosis Property Fund has entered into a sales agreement with Ulricraft, which could result in the company disposing of its commercial office portfolio for R6.3-billion.
Ulricraft is a special purpose vehicle (SPV) wholly owned by Vunani Capital Partners (VCP), a company listed on Equity Express Securities Exchange.
While VCP is currently the owner of all of the issued share capital of Ulricraft, upon fulfilment of all conditions precedent, it is expected that VCP will own only 6% to 9% of the SPV, with the balance to be held by other equity funders.
Proceeds from the disposal will be used to pay down debt from a current R9.4-billion to about R3-billion, which will substantially deleverage Rebosis’ balance sheet.
Subsequent to the transaction, Rebosis’ loan-to-value is expected to reduce to about 42% from the 72.2% reported for the six months ended February 28, in line with acceptable loan-to-value levels for real estate investment trusts (Reits).
Rebosis founder and CEO Dr Sisa Ngebulana says the transaction “crystallises value for shareholders and repositions Rebosis as a well-capitalised, retail-dominant Reit with solid growth prospects, paying consistent distributions to shareholders”.
The transaction is subject to several conditions precedent, including the successful completion of a due diligence by the SPV, regulatory approvals and approval by Rebosis’ shareholders.
Rebosis’ commercial portfolio includes 35 buildings and one industrial property of which 32 will be disposed of. About 15 of these assets are held directly by Rebosis and are independently valued at R3.6-billion, including some iconic buildings such as 11 Diagonal street, in Johannesburg.
A further 17 assets in Rebosis’ wholly owned subsidiary, Ascension Properties, independently valued at R1.9-billion, are also included in the disposal transaction.
Most of these assets are let by various government entities and parastatals, providing a defensive underpin. Three of the office assets are currently being converted into purpose-built student accommodation, Rebosis said on October 22.