One of the biggest malls in South Africa is up for sale

 ·16 May 2023

The biggest mall in the Eastern Cape, Baywest Mall, is one of five major retail centres that will be put up for sale in the Rebosis business rescue process.

Rebosis, a JSE-listed Real Estate Investment Trust (REIT), entered into business rescue in August 2022, following years of deterioration in financial performance.

The group was established by the Billion Group in 2010 and became the first black-managed and substantially black-owned property fund to be listed on the JSE.

While the company owns a number of high-value income-generating properties – including several large malls – the group came under increasing financial pressure in recent periods, which resulted in the group’s financial position deteriorating significantly.

Some notable pressures included the rising interest rate cycle on servicing debt costs as well as an inability to recover increased municipal costs from sovereign tenants.

Speaking to Moneyweb, one of the business rescue practitioners for the group, Jacques du Toit, said that the company’s financial woes were present before the Covid-19 pandemic hit – but the crisis and subsequent lockdowns piled on the pressure, leaving the group no option but to go into business rescue.

Du Toit said that the intention of the business rescue plan is “rectify the loan-to-values” of the business as far as possible.

To achieve this, the BRPs will look to sell properties in the portfolio at the best value possible to reduce debt levels.

“It is the intention to reach high levels through the public participation process and sales process, and then for Rebosis to remain with properties, to actually continue as a business and also continue as a listed entity,” he said.

This will see the BRPs focusing on around 41 properties, which include a mix of commercial properties and retail centres.

Specifically, there are five key retail centres, of which the biggest is the 87,000 square metre Baywest Mall in Gqeberha.

The others include Hemingways Mall in East London, Sunnypark and Bloed Street malls in Pretoria, and Forest Hills Mall in Centurion.

“So there are five major centres involved. The rest are mostly governmental properties, the rental properties on a commercial basis,” du Toit said. “The intention is actually to sell off the retail, and to go back to the original interest in the government space.”

According to the business rescue documentation, the retail portfolio carries an estimated value of around R5.3 billion.

The malls in question carry the following preliminary values:

  • Hemingways Mall: R1.72 billion
  • Baywest Mall: R1.6 billion
  • Forest Hill Mall: R870 million
  • Sunnypark Mall: R650 million
  • Bloed Street Mall: R430 million

Du Toit said that the BRPs have received “credible interest” in the retail portfolio, with the next process being to receive letters of interest.

“Our hope is to get good prices and to get the debt levels reduced, and to remain with some properties. Otherwise, of course, if we can’t achieve those debt levels, by all means everything will be sold at the end of the day.

“But we hope, and we trust that we can achieve good prices in the market, even in the difficult situation in the market.”


Hemingways Mall: R1.72 billion


Baywest Mall: R1.6 billion


Forest Hill Mall: R870 million


Sunnypark Mall: R650 million


Bloed Street Mall: R430 million

 


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