Rebosis – the first black majority owned and managed property fund to be listed on the JSE – has entered into voluntary business rescue, and cites one of the reasons for its financial distress to be prolonged delays in rental payments from government tenants.
Another is rising municipal costs that cannot be passed on to tenants.
The South African Institute of Black Property Professionals (SAIBPP) is therefore “extremely concerned” that Government’s “apathetic approach” will cripple more black-owned property businesses.
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It is also worried that it will take the Institute’s transformation initiatives backwards.
Rebosis, which has a diversified portfolio across the commercial and retail sectors, including the Baywest and Hemingways malls, was founded by Sisa Ngebulana in 2010 and the company was listed on the JSE in 2011. Its listing was hailed as a momentous achievement for transformation in the property landscape.
In a country that is still faced with solving the two most persistent challenges of landlessness amongst the majority population and ever-increasing rampant socio-economic inequality, SAIBPP president, Sylvester Martin, says the news of Rebosis entering a voluntary business rescue has dealt a massive blow to transformation. He notes that ownership patterns of publicly listed companies held by Black people remains “incredibly low” and this news takes the minimal transformation gains made over the years many steps back.
Even more concerning, he says, is that one of the reasons cited for Rebosis’ financial distress is prolonged delays in rental payments from government tenants.
“There has been a massive outcry from black landlords whose businesses are also under threat due to the prolonged delays with rental payments.
“The SAIBPP is extremely concerned that Government’s apathetic approach will cripple more black-owned property businesses and take our transformation initiatives a few steps back, something which we just cannot afford to allow”.
It is reported that the financially distressed company has received approval to suspend the trading of its shares on the JSE with immediate effect. The reasons cited for their financial distress include:
- increased interest rates and the threat of additional interest rate hikes
- increased municipal costs which are not capable of being passed on to tenants
- slow uptake of available rental space
- delayed rental payments from public sector tenants which include national and provincial government departments and municipalities
With government leases comprising more than 50% of its revenue, the SAIBPP says it is disappointing to note that the delayed payments are a contributing factor to the company’s financial distress, and the consequence that is now unfolding.
“On the one hand, Government is adamant that we need to action transformation in the property sector, and on the other hand, it is a contributor to Rebosis’ current state of distress,” the Institute says in a statement.
“The unpalatable increases in municipal costs, interest rate hikes, reduced investor confidence and generally lethargic property market can no longer be ignored. The cumulative knock-on effect is undoubtedly creating an inability to nurture and sustain transformation. This requires immediate and effective intervention by Government and all key stakeholders.”
Rebosis is hopeful that their plan to address their balance sheet constraints, consider alternative leasing measures to drive tenant uptake, and to increase tenant retention will be incorporated into the business rescue plan.
“The SAIBPP extends its support to Rebosis and is hopeful that with the assistance of an experienced and expert business rescue practitioner, it will be able to restructure its operational model, re-consider key strategies and focus areas and improve its cash flow to ensure sustainability and retain its position as one of our leading black owned property funds.
“The SAIBPP further calls on Government to play its pivotal role in the transformation of the industry by ensuring that it fast tracks the implementation of its transformation policies and strategies, instead of working against them.”
IOL BUSINESS