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Rebosis announces R6.3bn sale of its government-tenanted office portfolio

To a company known as Ulricraft, a newly established subsidiary of Vunani Capital Partners.
Sisa Ngebulana, founder and CEO of JSE-listed Rebosis Property Fund. Image: Supplied

Debt-laden Rebosis Property Fund announced the sale of its broader government-tenanted office portfolio in a surprising R6.32 billion deal on Thursday, which upon finalisation will slash its debt significantly.

Rebosis revealed in a JSE Sens statement that the sale (32 properties) will be to a company known as Ulricraft Proprietary Limited – a subsidiary of Vunani Capital Partners (VCP), which is listed on the Equity Express Securities Exchange (EESE).

Interestingly, in its Sens statement Rebosis lists the official valuation of the property portfolio being sold at just over R5.3 billion.

This means that if the sale goes through, the portfolio will be sold at a premium to the book value.

Ulricraft is a newly established “special purpose vehicle” company set up by VCP to acquire the office property assets from Rebosis, however, very little information about the company is available online.

Read: Ngebulana wants Rebosis’s LTV below 40%

“Rebosis is pleased to announce that it, together with its wholly-owned subsidiary Ascension Properties Limited, has concluded agreements with Ulricraft Proprietary Limited [the purchaser], in terms of which the purchaser shall acquire from the Rebosis Group the portfolio of rental enterprises [government-tenanted office] as a going concern and for an aggregate cash consideration of R6 319 099 000,” its Sens statement says.

“The sale portfolio comprises, inter alia, government and state-tenanted office assets which will be sold to the purchaser as going concerns in terms of the transaction,” Rebosis adds.

“The purchaser is an entity established for the purposes of participating in the transaction and is a wholly-owned subsidiary of VCP, a company listed on EESE,” the group further points out.

The Joburg-based EESE is the most recent exchange to be awarded a licence, according to its website. EESE notes that it was specifically created to look after the needs of broad-based black economic empowerment schemes.

In its JSE Sens statement, Rebosis notes that “VCP is currently the owner of all of the issued share capital of the purchaser [Ulricraft].” However, upon fulfilment of all the conditions precedent as part of the deal, “it is expected that VCP will only own between 6% and 9% of the purchaser”.

Read: Rebosis’s Ngebulana threatened to interdict Moti from AGM

Rebosis says that the balance will be “owned by the equity funders” of the transaction. However, these details are yet to be revealed.

“The transaction is consistent with the company’s strategy to deleverage and optimise its balance sheet by reducing its LTV [loan-to-value ratio],” the group states.

Rebosis adds that the transaction also aims to:

  • realise the value of the office segment of its portfolio;
  • restructure the business as a retail-focused fund; and
  • position the company to resume dividend payments to shareholders.

There are several conditions precedent for the sale to go ahead, such as securing the relevant approvals from competition authorities, successful completion of a due diligence process by the purchaser, and approval by Rebosis’ shareholders.

The group is hoping to finalise the transaction by February next year.

Rebosis issued a media statement related to the proposed transaction on Friday, saying that “proceeds from the disposal will be used to pay down [its] debt from a current R9.4 billion to approximately R3 billion”.

“Subsequent to the transaction, Rebosis’ LTV is expected to reduce to approximately 42% from the 72.2% reported for the six months ended 28 February 2021. [This is] in line with acceptable LTV levels for real estate investment trusts [Reits],” the group adds.

Commenting on the move, Rebosis founder and CEO Dr Sisa Ngebulana, says it is “an important milestone as part of our roadmap to deleverage the balance sheet”.

Ngebulana adds: “It crystallises value for shareholders and repositions Rebosis as a well-capitalised, retail dominant Reit with solid growth prospects, paying consistent distributions to shareholders.”

According to Rebosis, on successful conclusion of the transaction, the group’s repositioned retail-focused fund is expected to be valued at R7.5 billion and will comprise five dominant retail malls and four office/retail/other assets.

The group’s share price was up around 8% on Thursday following the announcement, and traded more than 7% firmer on Friday, at 29 cents a share.

Its market capitalisation is only around R189 million currently.

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This government-tenanted office portfolio of Rebosis is a hot-bed of corrupt deals over the years where the Govt signed over-inflated rentals to procure office space all in the name of BEE.

Boy this smells fishy, a debt-laden BEE entity selling a government tenanted portfolio to a BEE SPV (Ulricraft)? The only funder of a 100% government tenanted portfolio would be the PIC. Govt notoriously late in paying rentals. Please dig deeper Suren

I would not be surprised to find out in time that this is in effect a “financial restructuring” linked to Lootfreely House and its tenant’s patronage network. An elaborate exercise designed to refill the coffers which have run out of state capture funds. There go yet more of our tax contributions (directly or indirectly). Pity the majority poor citizens who are be robbed of their potential benefits.

This walks, looks and sounds very much like a duck

End of comments.

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