Historic South African property company in serious trouble

The first black-owned and managed landlord to list on the Johannesburg Stock Exchange (JSE) has lost its real estate investment trust (REIT) status for failing to submit a compliance declaration.

In short, “REIT status” means that a company is classified as a Real Estate Investment Trust (REIT), which grants it specific tax benefits and requires it to distribute a certain percentage of its taxable earnings as dividends. 

On the JSE, a REIT must pay at least 75% of its taxable earnings available for distribution to investors as dividends, providing investors with certainty that their net income will be paid out.

Losing this status can have serious consequences for companies, both from an operational and financial perspective.

For example, the company would no longer be exempt from corporate income tax, but would now be taxed like a regular corporation, which pays tax on profits before distributing dividends.

In addition, the company may lose legitimacy and attractiveness among investors, as it is no longer subject to the JSE’s dividend payout requirements for REITs.

Rebosis Property Fund was established by the Billion Group in 2010 and, a year later, became the first black-managed and substantially black-held property fund to be listed on the JSE. 

On 24 July 2013, the Fund was approved as a Real Estate Investment Trust (REIT).

Rebosis’ portfolio primarily consists of early-stage, regionally dominant shopping centres and large, single-tenanted commercial offices in nodes attractive to the South African government, which provides a sovereign underpinning.

The fund boasted a portfolio of 43 properties valued at R17.5 billion, with notable assets that included Baywest Mall in Port Elizabeth, Forest Hill City in Tshwane, Antalis in Johannesburg, and Sunnypark Shopping Centre in Pretoria.

Rebosis performed relatively well for years, but in 2022, it informed shareholders that it was entering business rescue proceedings and suspended trading of its shares on the JSE.

Moneyweb explained that Rebosis’ financial troubles date back, in part, to Brexit, following a failed venture in the United Kingdom.

The company had to write down the value of its UK properties significantly and sold them for next to nothing. 

“Its debt or loan-to-value [LTV] ratio was already one of the highest in the sector when Covid hit, and it seems that the Covid-19 pandemic broke the camel’s back,” the publication reported.

Property Flash reported that Rebosis’ sovereign tenants were also partly to blame for the company’s decline.

For years, Rebosis rented space to government tenants, arguing that sovereign leases are more reliable as government tenants are unlikely to default.

However, the company found that state tenants are often slow payers, which pressured the REIT’s cash flow. 

“This is even though not all of its tenants have been state organisations. But the reasons for Rebosis’ fall are multi-pronged and have persisted for years,” the publication said.

Rebosis in hot water

Following the business rescue announcement, Rebosis disposed of several properties in its portfolio, and the deadline for publication of its business rescue plan was repeatedly extended.

The fund remains in business rescue to this day, and its joint business rescue practitioners (BRPs), Jacques Du Toit and Phahlani Mkhombo, have been appointed to Rebosis’ board as non-executive directors.

The company has continued to provide investors with regular updates on the business rescue process.

However, on 31 March 2025, the JSE informed shareholders via SENS that Rebosis failed to submit its REIT Compliance Declaration, as required by the JSE’s Listings Requirements.

“Accordingly, holders of securities of the company are cautioned that the company’s REIT status is under threat of removal,” the exchange said.

In Rebosis’ latest Quarterly Progress Report, released on 3 April 2025, it did not directly address the JSE’s warning.

It said the joint BRPs undertake to continue providing monthly reports to the JSE, the Companies and Intellectual Property Commission, and the creditors.

The company also committed to keeping other affected persons informed on the progress of the business rescue proceedings as required by the Companies Act and the JSE Listings Requirements.

However, on 29 April 2025, the JSE released a SENS announcement informing the market that Rebosis has still not submitted its REIT Compliance Declaration.

“Consequently, the JSE notified the company of its decision to remove its REIT status in accordance with paragraph 13.50(c) of the Requirements,” the exchange said.

“The company has not objected to the decision, and therefore, the REIT status of Rebosis will be removed.”