Sisa Ngebulana. Picture: RUSSELL ROBERTS
Sisa Ngebulana. Picture: RUSSELL ROBERTS

Rebosis Property Fund, controlled by Eastern Cape real estate entrepreneur Sisa Ngebulana, plunged the most in three months after reporting its first dividend cut since listing in 2011.

Rebosis said it would cut the dividend for the six months to June by as much as a quarter compared with a year earlier, citing what it called the negative effects of once-off accounting items on its income.

The firm has suffered with its peers across SA as a weakening economy has meant many retailers have struggled to grow sales. About half of Rebosis’s exposure is to shopping centres.


Stats SA economic data released last week showed retail sales growth slowed from 1.9% year on year in May to 0.7% in June.

Rebosis has also seen its investment in UK retail weaken as perceptions about how the Brexit process will unfold have sent valuations there down.

Rebosis’s 30% interest in New Frontier Properties, a UK mall owner, is worth about R1bn, which is about 5% of its non-current assets.

Rebosis’s share price fell 6.8% in early trade on Monday after it said the dividend attributable to its main B shares would be 20%-25% lower for the six months to August 2018 compared with the 2017 period.

This was the largest share price fall since May 23, when it dropped 7.6%.

Rebosis has a dual capital structure with A and B shares which suits investors with different risk profiles. Rebosis A shareholders are guaranteed distribution growth of 5% and are paid first. B shareholders are paid the residual.

The company advised that the dividend per Rebosis B share for the six-month period to August 2018 was expected to be 50.66c-54.04c, between 20% and 25% lower than the 67.55c for the comparative six-month period ended August 31 2017.

Rebosis’s B-share price closed 6.78% down at R7.15 for the day, leaving it down 4.78% for the year.

Ngebulana said Rebosis had determined a number of "once-off items" that were holding the fund back.

Rebosis would account for these items at once, instead of over time, and in this way remove "some uncertainty from the stock".

This included a decline in earnings from its investment in New Frontier, a company that had seen its shopping centres devalued because of jitters around how the Brexit process would unfold and its effects on UK retail.

A drop in income and valuations due to store closures and tenants entering administration had also had a negative effect.

There was also an equity dilution related to Rebosis’s acquisition of the Baywest and Forest Hill shopping centres in Port Elizabeth and Centurion.

Anas Madhi, a director at Meago Asset Management, welcomed Rebosis’s dividend rebasing strategy.

"The company will remove lumpy nonrecurring income streams and look to degear the balance sheet with the planned disposal of its office assets. This will increase the fund’s retail bias and allow for the fund to consider share buybacks on a highly attractive yield," he said.