Sisa Ngebulana. Picture: FINANCIAL MAIL
Sisa Ngebulana. Picture: FINANCIAL MAIL

Rebosis Property Fund, which has lost favour among investors partly because of its elevated debt levels, says it will raise about R1.8bn by selling three malls as part of its plans to deleverage.

“The company has experienced delays in the planned disposals of its office portfolio, as funding the acquisition of office properties rely on tenants’ long-term leases, which have been taking longer than anticipated to renew,” Rebosis said.

As a result, Rebosis said “it is important to expedite the reduction of its loan-to-value ratio in order to achieve a lower cost of funding, an improved credit rating and a stronger balance sheet”.

This would “return market confidence in Rebosis”, it said.

Rebosis said it would sell three retail properties — Mdantsane City Shopping Centre, Sunnypark Shopping Centre and Bloedstreet Mall — to Vukile Property Fund for R1.8bn.

“The proceeds of the disposals will be used to reduce the existing debt of the company," it said.

The sales are expected to become effective at the end of August.

Rebosis wants to reduce its loan-to-value ratio to below 40%, from 49.4% at the end of November.

Besides debt, the group has also been hurt by a poor performance by UK mall owner New Frontier Properties and by difficulties in renewing government leases.

Its shares were 12.1% down at R1.23 on Monday morning. In February 2017, the stock reached highs of more than R13.

The group warned recently that its distributable income for the year ending August 2019 would fall between 52% and 62%.

This was partly because of higher debt funding costs and weak net property income growth. 

Rebosis was listed by CEO Sisa Ngebulana eight years ago.

Vukile said the deal with Rebosis was “consistent with Vukile's SA focus on mid-to-low LSM shopping centres in SA townships and urban areas”.

“The acquisition will complement Vukile's retail portfolio and positioning as a leading retail real estate investment trust in SA.”

hedleyn@businesslive.co.za