REB | Uncertainties abound
Rebosis reported FY'17 DPS of 128.35c (REB) and 240.82c (REA). The REB dividend represents 7.4% growth y/y which was marginally ahead of our forecast of 7.1% y/y and towards the lower end of management guidance of 7 to 9%. The REA dividend of 240.82c was its maiden full year dividend. Operationally the like-for-like portfolio performed admirably with retail net property income growth of 6.6% and office at 6.5%. Despite the resilient organic performance, the result was overshadowed by the significant use of once off income (R41m profit on asset sale and R37m fee for the BEE deal) in order to compensate for the dilution from the Billion transaction. Despite the decline in LTV from 49.8% to 45.6% (as a result of the deconsolidation of New Frontier), the LTV remains excessively high. In the note we provide an update on the balance sheet position, we provide a sensitivity analysis for the potential income dilution from the expiration of the rental guarantee (Billion assets), update our distribution growth forecast and valuation.Rebosis Property Fund Limited is a South Africa-based real estate investment trust (REIT). The Company operates in three business segments: retail, office and industrial. The Company's portfolio consists of shopping centers and single tenanted commercial offices. The Company's portfolio consists of approximately 20 retail, commercial and industrial properties located in Gauteng, the Eastern Cape, KwaZulu-Natal and Northwest Province. The Company's properties include Victoria Mxenge Building, Sassa Building, Revenue Building, 270 Jabu Ndlovu, Salu Building, Liberty Building, Bank of Lisbon, 28 Harrison & 88 Fox street, Arbour Square, 18 Rissik Street, 64 Eloff Street, 124 main street, 99 market street, Antalis Building, 189 Schoeman street/Waterbron Building, Rebosis Property T/A Sunnypark Shopping Centre, Mdantsane City Shopping Centre, Hemingsways Mall and Bloed street mall.
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