New Rebosis boss paints cautiously optimistic retail property picture

Otis Tshabalala, the newly appointed boss of Rebosis, struck a cautiously optimistic tone for the property fund, saying its shopping mall tenants were unlikely to be cut off from their customers by further lockdowns due to increasing infections and additional measures to curb the spread of the pandemic.  

“We believe that the sector may have bottomed out and that things can only get progressively better,” said Tshabalala, who was speaking to Business Day, on his second day at the helm, of how the industry was hammered by lockdown restrictions that forced it to join rivals in the sector providing rental concessions, or reduced prices.

“Further concessions are based on whether there will be additional lockdowns. We, however, do not envisage that the country will go back to hard lockdowns especially considering the increase in vaccinations and possible additional measures to manage the spread of the virus, which exclude lockdowns.”

Tshabalala’s comments come as infection rates rise, driven by the new Covid-19 variant, Omicron, which has driven a sharp increase in hospitalisation in Gauteng and has scientists around the world racing to understand its properties, how harmful it is compared to other strains and whether it will evade vaccines.  

The variant has also prompted the government to seriously consider making Covid-19 jabs compulsory for certain activities and places, a move that could have favourable business implications for shopping mall tenants like Rebosis.

Tshabalala took over from Sisa Ngebulana, who founded the company and was an instrumental figure in the acquisition-fuelled growth that swelled its property assets from just over R3bn a decade ago to more than R13bn. But the company racked up too much debt to fund some of its flagship malls, pushing its loan-to-value  ratio — used by lenders to gauge the financial health of a property company — to a dangerously high 71%.   

In an effort to bring the ratio to acceptable industry levels of below 50%, Rebosis said in October it would sell office properties worth R6.3bn, leaving it with retail tenants in a portfolio worth R5bn. The deal is expected to slash its loan-to-value to about 42%.

Aside from considering acquisitions, once the deal has been completed, and sticking to the basics — leasing space, collecting rent and filling vacancies, Tshabalala is also looking at new income streams. 

“We are, however, cognisant of the need to be flexible in certain areas and with certain properties to retain tenants. In this regard we will ensure that we remain competitive. We are also constantly exploring other ways to increase revenue streams through antenna rentals, solar installations and advertising opportunities, for example,” he said.

Tshabalala previously served as the CEO of SA Corporate Real Estate, and has more than 28 years of experience in the commercial property sector, with more than 12 of those in property finance.

Ngebulana, who also stepped down from the board, remains a big shareholder in Rebosis, and will consult until the end of May 2022 to ensure a smooth handover.