Rebosis Property Fund, the black managed and owned real estate investment trust which was listed in 2011, waited until after the equity markets closed on Friday to release a dire trading statement, which warned its A- and B-share dividends would fall 52% on a combined basis, in the year to August.
This was the largest drop in dividend growth in the history of the company, founded and managed by entrepreneur Sisa Ngebulana.
Distributable income for the year to end-August is expected to be 52% to 62% lower than that of the previous year.
The dividend per A share for the year will continue to attract a guaranteed distribution growth of 5% in line with Rebosis’s dividend policy but the dividend per B Share for that period is expected to be 22c to 24c, being 74% to 76% lower than previously.
Rebosis blamed an increase in the cost of debt due to its high loan-to-value ratio; the cancellation of a cross-currency derivative because of the reduced value of its foreign investment in UK mall owner New Frontier Properties; and net property income growth being lower than the expected.
The company said it was being forced to lower rentals in order to retain tenants when leases came up for renewal.
The board has decided not to pay interim dividends but will pay a full-year dividend.
“The board of directors hereby advises shareholders that given the current weak balance sheet with higher loan-to-value levels, especially in light of the major impairment of the UK investment asset, it is critical in the short-term that capital is deployed to strengthen the balance sheet and to deleverage the company,” it said.