The proposed merger of BEE property funds Delta and Rebosis will be delayed by at least a month while the two finalise a plan meant to help their respective businesses survive.
The companies, which have each seen their share prices lose about 90% of their value in 2019, announced on August 6 that they were in talks to combine forces and tackle a weak economic environment, poor vacancies and high debt levels, but they have not released any details on their proposed marriage yet.
Fund managers in SA’s listed property sector, which has struggled to recover in 2019 so far after suffering its worst year in more than two decades in 2018, have been calling for companies to consolidate to increase their size and liquidity.
Rebosis CEO Sisa Ngebulana, who is a prominent Mthatha businessman, and Delta CEO Sandile Nomvete, a former executive at property management group MotsengMarriott, said on Tuesday that a circular detailing the logistics of the merger will be released towards the end of October.
Delta and Rebosis have been facing similar challenges, including struggling to get government departments to commit to long-term leases, as well as disappointing returns from their other retail and industrial assets.
A marriage of Delta and Rebosis — which owns Hemingways Mall in East London, Forest Hill in Centurion and Baywest Shopping Centre in Port Elizabeth — would create a company with R29bn worth of assets.
The two companies have not yet discussed how they would merge or put a price on the deal. This includes which fund would buy the other and which management would be retained — including who would be the CEO of the merged entity.
Ngebulana said in August that the two companies want to create a clear and understandable capital structure and that shareholders would be given various different options.
“We need to see what shareholders feel works best. We might merge the two groups under a new entity. We want to create something without baggage behind it which can create value for shareholders.”
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