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Results for the year ended 31 August 2020
REBOSIS PROPERTY FUND LIMITED
(Rebosis or the company or the fund)
(Registration number 2010/003468/06)
(Approved as a REIT by the JSE)
JSE share code Rebosis A share: REA
JSE share code Rebosis Ordinary share: REB
ISIN Rebosis A share: ZAE000240552
ISIN Rebosis Ordinary share: ZAE000201687
SHORT-FORM ANNOUNCEMENT RESULTS
for the year ended 31 August 2020
Asset disposals R516m
Net Property Income growth# (7.6%)
Total Assets R13.7 bn
Vacancy** 9.1%
Total GLA Renewed 43 047m2
Portfolio WALE 2.8 years
# Like for like before bad debt, COVID-19 Reprieves and disposals.
**6.4% excl. NBC and 373 Pretorius street under conversion
These adjusted numbers are the responsibility of the directors, have been prepared for illustrative purposes
only and because of their nature may not fairly present Rebosis’ financial position.
Group
Reviewed for the Audited for the
year ended year ended
31-Aug-20 31-Aug-19
Restated
Revenue (R’000) 1 704 854 1 842 144
Distributable income per A Share (cents) 278.78 265.50
Distributable income per B Share (cents) - 9.51
Basic and diluted earnings per A Share (cents) 278.78 265.50
Basic and diluted earnings per B Share (cents) (9.67) (972.14)
Basic and diluted headline earnings per A Share (cents) 278.78 265.50
Basic and diluted headline earnings per B Share (cents) (47.94) (361.52)
Net asset value per A Share (R) 1.15 13.65
Net asset value per B Share (R) 4.89 3.60
INTRODUCTION
Rebosis is a JSE listed real estate investment trust (REIT) with a high quality diversified portfolio across
commercial and retail assets. The majority of the commercial income enjoys a sovereign underpin from leases to
national government departments across 36 buildings. Its retail portfolio has a mix of shopping centres
including Baywest Mall (Port Elizabeth) and Forest Hill City (Centurion).
FINANCIAL RESULTS
Distributable income before tax is R62 million excluding capitalised interest on deferred payment liability of
R23 million and tax. Due to the company not declaring distributions in the current financial year, the tax
expense is R44 million for the current year and a prior year tax adjustment of R30 million. This lower
distributable income figure has been impacted by Covid-19 concessions on the retail portfolio of R148 million
including bad debt write-offs and changes in the expected credit loss allowances. Finance costs including debt
structuring fees amortised costs decreased by R131 million mainly due to the repayment of facilities using
proceeds from the sale of Mdantsane Shopping Centre as well as the repo rate cuts.
The Board deemed it prudent to deleverage the fund and has therefore resolved to not declare a full year
dividend for the year ending 31 August 2020.
The retail property portfolio was independently valued at year end while the commercial property portfolio was
independently valued at the interim reporting period, taking into account COVID-19 considerations. During the
period, proceeds from the disposal of Mdantsane Shopping Centre were used to settle Nedbank facilities to the
value of R491 million.
Detailed commentary on investment property changes
* The fund reported a fair value of R15.601 billion at 31 August 2019.
* Subsequently investment property carrying value at 31 August 2019 was restated in order to address the 2019
qualified audit opinion.
* This resulted in an adjustment of R2.318 billion to the carrying value of investment property at 31 August
2019 to R13.283 billion (R12.767 billion excluding Mdantsane City that was transferred in December 2019).
* Given the restatement of our valuations to conservative valuations at 31 August 2019, we have not had
further devaluations of our assets in the current financial year despite COVID-19 impact.
* The total carrying value of investment property in the current financial year at 31 August 2020 is R13.160
billion, compared to R12.767 billion stated above. This has resulted in an increase in fair value of R391
million in the current financial year to investment property, largely as a result of a number of commercial
office lease renewals which changed the discount and cap rates.
* The fair value adjustment to the restated carrying value resulted in the loan to value being restated to
75.7% for 31 August 2019, with an improvement of the loan to value in the current financial year at 31 August
2020 to 72.4% as a result of the Mdantsane City disposal and positive valuations.
Quadrant Properties, led by Mr. Peter Parfitt, was responsible for the valuation of the retail portfolio and
the office and industrial properties were valued by CBRE, led by Mr Carlo Geldenhuys. Both valuers are
registered valuers in terms of Section 19 of the Property Valuers Professional Act (Act No 47 of 2000). The
valuers work independently of each other and their valuations are combined to arrive at the value of the full
portfolio.
The significant inputs and assumptions in respect of the valuation process are developed in close consultation
with management. The valuation process and fair value changes are reviewed by the audit committee and the
board of directors at each reporting date. The directors confirm that there have been no material changes to
the assumptions applied by the registered valuers.
The company is engaged in arbitration with regards to a possible amount owing to the Billion Group relating to
the original purchase of the Forest Hill and Baywest properties. It was agreed that an adjustment account
would be kept and reconciled between the entities. These amounts are not recognised in the statement of
financial position as no reliable estimate of these liabilities can be made. In the event that the Group is
found to be liable, the independent directors are of the opinion that the amount is not material.
IMPACT OF Covid-19 ON THE FINANCIAL STATEMENTS
The Company had established a Covid-19 Committee to deal with the pandemic in early March. A five-tier
response program was developed based on the severity of the level of infections. The plan focuses on our
staff, our tenants and our customers. This enabled us to react swiftly to the actions taken by Government and
ensure that we complied with all the regulations. The lockdown at level 5 from 26 March to 30 April did not
materially impact our Commercial property collections however has severely impacted our Retail tenants.
As only essential services tenants could trade, retail collections in April were 39%. From 1 May when the
country moved to level 4 and additional stores could trade, collections increased to 50%. The collection rate
for June under level 3 increased to 78%. Our collection rate in August had improved to 95%. The company
negotiated concessions with tenants during the period of the pandemic. The impact of the concessions was R148
million including bad debt write-offs and changes in the expected credit loss allowances. The outcome of the
negotiations was recognised in the results. The company is pursuing an insurance claim for these losses
however insurers are yet to respond to the claim. The longterm impact of the pandemic is still uncertain and
is being closely monitored.
DECLARATION AND PAYMENT OF CASH DIVIDEND
The Rebosis Board has resolved not to declare a dividend for the financial year-ended 31 August 2020. In terms
of the Companies Act the board is required to perform the solvency and liquidity test when considering payment
of a distribution. This test was performed and based on management’s assessment the company is currently
solvent but not liquid and therefore unable to make payment.
PROSPECTS
The interest rates decrease has had a material positive impact on the fund given the debt levels, with the
unhedged and expiring hedged portion of debt at 72% in H2 (2020). This will continue to lead towards a much
improved interest cover ratio and better returns for shareholders.
We remain confident on the office portfolio given its defensive nature and this will mitigate the risk from
the retail portfolio. The Covid 19 negative impact has affected collections from impacted retailers on our
retail portfolio, with 73%, 78%, 88% and 96% overall collection rates in April, May, June and August
respectively, We have had higher collection rates for the months September (96%) and October (104%) and have
seen higher recoveries for food and beverage services and the entertainment sectors than anticipated.
Our objective will be to continue to assist the small businesses to ensure continuity into the future through
sensible rent concessions. The lack of growth in the economy, now exacerbated by the Covid 19 impact, will
continue to negatively affect the retail environment, more-so the weak currency that implies higher input cost
to retailers and lesser margins on products, leading to a squeeze on landlord rentals. Our focus will be on
achieving good lease renewals, vacancy fill ups that are more informed by innovative repositioning of the
offerings in our retail centres in line with global trends.
We will continue deleveraging our balance sheet in an endeavour to achieve an optimal capital structure
through asset disposals at good value with some imminent transactions in progress. Furthermore, in an
endeavour to realise shareholder value and continued success of the business, the Board continues to assessing
various approaches from the market.
SHORT-FORM ANNOUNCEMENT
This Short-form Announcement has been prepared by Ms A.L. Magwentshu CA (SA), in her capacity as Interim Chief
Financial Officer of the company, and is the responsibility of the directors of Rebosis. The Full Announcement
("Full Announcement") was released on SENS on 3 December 2020 and can be found on the company’s website at
http://www.rebosis.co.za/#investor-relations. The Full Announcement is also available on the JSE’s website at
https://senspdf.jse.co.za/documents/2020/jse/isse/REB/ye2020.pdf.
The information contained in this Short-form Announcement is only a summary of the information in the Full
Announcement and does not contain full or complete details. Any investment decision by investors and/or
shareholders should be based on consideration of the Full Announcement published on SENS and on the company’s
website as a whole.
A copy of the Full Announcement is available for inspection, and may be requested, by investors and/or
shareholders at the company’s registered office, Office 95 & 95A, Forest Hill City, 6922 Forest Beech Street,
Monavoni Centurion, 0157, Attention: Asathi Magwentshu, and at the offices of the Sponsor (Nedbank Corporate
and Investment Banking, a division of Nedbank Limited, Nedbank 135 Rivonia Campus, 135 Rivonia Road, Sandown,
Sandton, 2196, Attention: D Thiele) at no charge, during business hours from 4 December 2020 to 21 December
2020.
The information contained in this Short-form Announcement has not been reviewed or reported on by the
company’s auditors.
The Full announcement has been reviewed by the company’s auditors and their unqualified review conclusion is
available on the company’s website at http://www.rebosis.co.za/#investor-relations. Shareholders are advised
that the review conclusion by BDO South Africa Incorporated contains (i)a material uncertainty related to
going concern which indicates that the Group’s current liabilities exceeded its current assets by R9 830 525
000 and (ii) an emphasis of matter related to prior period adjustment in that the investment property values
as at 31 August 2019 were restated to the valuation amounts determined by an independent valuer. Management
also reassessed the carrying value of goodwill and restated the 31 August 2019 figure by R45.8 million. The
review conclusion was not modified as a result of the material uncertainty and emphasis of matter.
By order of the Board
4 December 2020
Sponsor
Nedbank Corporate and Investment Banking
Date: 04-12-2020 03:58:00
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