Financial Mail and Business Day

Rebosis boss paints ‘cautiously optimistic’ retail property picture

Denise Mhlanga Property Writer mhlangad@businesslive.co.za

Otis Tshabalala, the newly appointed CEO of Rebosis, struck a cautiously optimistic tone for the property fund, saying its shopping mall tenants are unlikely to be cut off from their customers by further lockdowns due to increasing infections and more measures to curb the spread of Covid-19.

“We believe that the sector may have bottomed out and that things can only get progressively better,” Tshabalala said on his second day at the helm. He told Business Day how the industry was hammered by lockdown restrictions that forced it to join rivals in 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.”

Tshabalala’s comments come as infection rates rise, driven by the new Covid-19 variant, Omicron. There has been a sharp increase in hospitalisations and scientists around the world are racing to understand its properties, how harmful it is compared to other strains and whether it will withstand vaccination.

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

Tshabalala took over from Sisa Ngebulana, founder of the company, who was instrumental in acquisition-fuelled growth which swelled its assets from about R3bn a decade ago to more than R13bn. However, the company racked up too much debt to fund its flagship malls, pushing its loan-to-value ratio — a bank gauge of the financial health of a property company — to a dangerously high 71%.

In an effort to lower 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. This is expected to slash loan-to-value to 42%.

Aside from acquisitions, once the sales have been completed and while 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.”

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

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

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2021-12-03T08:00:00.0000000Z

2021-12-03T08:00:00.0000000Z

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