Embattled property group Rebosis has lost its real estate investment trusts (Reit) status in what market pundits say marks a decisive shift in the JSE’s enforcement of regulatory standards.
Another firm in the industry, aReit, has also lost its Reit status.
Both Rebosis and aReit have had their Reit statuses stripped due to non-submission of Reit certificates.
Golden Section Capital MD Garreth Elston said the move by the JSE was the right decision, noting that the SA Reit sector is working to regain its status as a preferred investment option and must uphold the highest standards to attract investors.
“For both Rebosis, in the past, and aReit more recently, the JSE has if anything taken way too long to act. Neither company could accuse the JSE of acting too hastily, and both were given substantial time periods to remedy their regulatory shortcomings as demanded by the exchange,” Elston said.
Meanwhile, aReit trade was also suspended from the JSE in June last year for failing to publish its financial statements on time.
Elston said the listed property sector must uphold the highest operational, ethical and regulatory standards, and the JSE must act swiftly to hold noncompliant companies accountable. Investor trust, he added, depends on strong oversight and adherence to best practices.
According to director and issuer at the JSE Andre Visser, to obtain Reit status companies must meet criteria such as R300m in assets, 75% rental income, liabilities under 60% of assets, and distribute 75% of profits within four months.
In addition to this, ongoing compliance with JSE requirements is mandatory.
Rebosis, the first black-owned and managed fund listed on the JSE, entered business rescue in 2022 after struggling to recover rising municipal costs from government tenants and facing ongoing rental payment delays. It was forced to sell 27 properties for just over R7bn in the last two years. Trading of its shares was suspended on the JSE.
Long plagued by financial and operational challenges, Rebosis’ removal marks yet another blow for the once-prominent fund. It grew rapidly between 2011 and 2016 through aggressive acquisitions. However, the debt-fuelled expansion left it exposed to market shifts and economic downturns.
In 2021, Rebosis had a sector-high loan-to-value ratio (LTV) of over 75%, which is way above the industry average of 50%.
SA Reit association CEO Joanne Solomon told Business Day that these are not signs of decline but of evolution.
“While some companies have delisted, this shift presents new opportunities: the market is concentrating on quality Reits with clear strategies and strong governance; instruments like green bonds and sustainability-linked finance are gaining traction, helping Reits diversify funding; listed Reits remain subject to strict disclosure standards, supporting investor trust,” Solomon said.
According to Research Trends and Directions of Reit performance risks, Reits face a higher risk of failure than general market firms, mainly due to heavy debt use and the requirement to distribute 90% of taxable income as dividends — leaving them more vulnerable during economic downturns or market volatility.
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