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Rebosis a heavyweight among black-run funds

Posted On Monday, 18 February 2013 10:16 Published by eProp@News
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Substantially black-held property company Rebosis Property Fund is likely to surpass its targeted asset base of R10bn well before the initial target date of 2017, says CE Sisa Ngebulana.

The fund, established by property development and investment company Billion Group and listed on the JSE in May 2011, has an asset base of R4.5bn, but its recently announced acquisitions will push that up to R6.2bn.

Mr Ngebulana says the fund is targeting another R2bn worth of acquisitions this year, which will see the asset base reaching R8.2bn. A "comfortable target" is to grow by R1bn-R2bn a year.

Rebosis is largely retail focused, owning large shopping centres, and is targeting at least two-thirds of its portfolio to be made up of retail assets by value, with most of the rest government office space.

Earlier this month Rebosis successfully raised R650m in an oversubscribed rights offer — saying it would use the funds to reduce gearing and strengthen its balance sheet.

"We are a growing company. We have a lot of projects in the pipeline, whether from an acquisition perspective, from third parties or our own pipeline; from the right of first refusal we have to Billion assets as and when they’re sold to the market," Mr Ngebulana says.

"So we’ve got to be correctly geared — our gearing was about 37%. That’s moved down to about 22%."

Access to cash and headroom means Rebosis is "able to move quickly on deals", by avoiding having to raise capital on the market for each deal.

He says Rebosis is looking for larger, high-quality assets, and adds the fund is "attractively priced given the quality of the underlying assets".

"A lot of retail counters are trading at about 30% premium to their net asset value (NAV). We are almost at NAV, so there’s a lot of upside" ahead.

Mr Ngebulana says Rebosis will convert to the real estate investment trust (Reit) structure due to be implemented in South Africa in April, which he believes will have a "big impact" on South African listed property.

"It puts you on par with global counters and it makes you attractive. It’s easy for global investors to access the market with counters whose make-up they’re familiar with."

Mr Ngebulana says "the more foreign ownership you have, the more premium you will command". This is because foreign investors will be more likely to pay higher premiums than South African ones since yields in other countries are low compared with local ones.

"For us there’s enough pool of capital here, but it’s nice to improve the universe of investors, particularly with people who are not used to as high returns," Mr Ngebulana says.

Old Mutual Investment Group senior portfolio manager Evan Robins says Rebosis is the "heavyweight" of the black-managed listed property funds.

As the management company (Billion) is primarily a property developer and not a property manager, Rebosis "has a significant potential acquisition pipeline of prime assets not otherwise available", Mr Robins says.

The Forest Hill shopping centre which Billion is developing, and which Rebosis has the option to buy, "has exciting potential".

Neil Stuart-Findlay, portfolio manager at Investec Asset Management, says Rebosis is led by "a motivated, entrepreneurial management team" and the fund is "starting to find its place in the listed space".

Its office portfolio offers "a defensive income stream given the extended lease expiry profile", he says.

On the retail front, a large number of the portfolio’s leases are coming up for renewal.

"I think that’s going to be key in terms of their medium-term prospects," Mr Stuart-Findlay says.

Rebosis offers a yield "materially higher than the sector as a whole", while growth is expected to be "slightly ahead of its peers".

Source: BD 

Last modified on Monday, 18 February 2013 10:18

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