It is a related-party deal as Rebosis CEO Sisa Ngebulana is the founder of Billion.
Under the proposed deal, Rebosis will acquire 100% of Baywest City shopping centre, the largest mall in the Eastern Cape; Forest Hill City, a mall in Centurion and a 50.1% undivided share in BT Ngebs City mall in Mthatha.
"The deal is still undergoing the negotiation and discussion process, but based on the information currently released, the deal is dilutive for shareholders, given that Rebosis will have to issue mostly equity to fund the acquisition," said Stanlib listed property analyst Chloe Ma. "Rebosis is currently trading around a 13% yield, so funding a deal that yields around 7.5% even with a portion of debt, will be dilutive.
"We believe investors may find the price of the malls rich, given the current economic climate, and that two of the three malls have traded for less than a year. There is, therefore, no sufficient track record with which to determine whether the centres are trading well enough to justify the price," she said.
But Thabo Ramushu, an executive director at Meago Asset Management, said the deal could bring long-term benefits to Rebosis.
He said the deal would enable Rebosis to become a sizeable fund that would be entrenched in the South African Listed Property Index (Sapy).
"Initially, there will be a dilutionary effect for shareholders, but I believe there are long-term benefits for Rebosis. It will not fall in and out of the Sapy, and will be exposed to funds that track the index. It will also be able to make larger deals. There also won't be the perception of a conflict of interests between Rebosis and Billion any more," he said.
Rebosis, which listed five years ago with R3.6bn worth of assets, would acquire full ownership of two shopping malls, half of a third mall, and Billion Asset Management and Billion Property Service, giving it significant scale and liquidity. The deal would push total assets under management to R18.6bn.
Source: Business Day
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