Hemingways mall owner seeks to reduce company debt levels
Sisa sells BCM shopping mall
Mdantsane City shopping centre will have a new owner in August.
Cash-light and debt-heavy Rebosis Property Fund has sold the Mdantsane flagship and two other properties – Sunnypark mall and Bloedstreet mall, both in Pretoria – to Vukile Property Fund.
The R1.8bn deal takes effect in August.
In addition to these sales, Hemingways Mall, Rebosis’ flagship mall in East London, could also be on the market, speculated East London NVest Securities director Liam Graham. He said the transaction left Rebosis with three large malls: Hemingways, Baywest in Port Elizabeth and Forest Hill City in Pretoria West.
“There are reports, stemming from due diligence exercises currently under way that Rebosis is set to unload another two of its malls, so there is a good chance that Hemingways is on the block.”
Rebosis has taken a heavy knock in the market, with shares down to R1.15 from a February 2017 high of more than R13.
Anticipated income by Rebosis’ year-end (August) could be down as much as 60%.
Sisa Ngebulana, CEO of Rebosis, could not be reached for comment.
Rebosis earlier sent out a press release on the sale of the three malls, but no mention was made regarding the sale of two other malls.
Graham said the fact that Vukile was prepared to invest R1.8bn in the malls was a positive sign. Rebosis was in a liquidity squeeze, he added.
Vukile said: “This sort of investment means that Vukile sees value in the properties, and will probably spend money on creating a better offering to the customers.
“Vukile is a tier one [top level] property group, and the change in ownership can only be a positive.”
Vukile, based in Johannesburg, is listed on the JSE, and has a secondary listing on the Namibian Stock Exchange.
Ngebulana launched Rebosis in 2013. It was the first black-owned and managed property group to list on the JSE.
In the release, Rebosis said it was under pressure mainly due to its investment in their poorly-performing UK mall owning New Frontier Properties.
The UK corporation has seen UK rentals and demand dwindle due to what Rebosis said were uncertainties caused by Brexit. This in turn lifted debt levels.
Rebosis said the planned disposal of its office portfolio was going more slowly than anticipated, hence the need to sell off the malls.
The Vukile deal would help reduce the debt level from nearly 50% down to a more acceptable 40%, and this would “return market confidence in Rebosis”.
The sale comes on top of Rebosis’ sales of office buildings for more than R5bn in 2018.
The acquisitions fall within Vukile’s published aims of securing greater presence in the mid-to-low LSM (Living Standards Measure) malls in township and urban areas.
The deal enhances Vukile’s retail portfolio and positioning in SA.
The Rebosis release said their office tenants were slow in signing rentals, which was causing problems in its office portfolio.
Rebosis investors include the Government Employees Pension Fund, which holds about 20.37% of Rebosis, and Coronation Fund Managers, which has a 6% stake.