Real estate: Urge to merge suddenly gets very serious
Wave of consolidation in SA property sector is broadly positive – scale matters when the going gets tough
A merger with Delta Property Fund (https://www.sharenet.co.za/v3/quickshare.php?scode=DLT) could be the lifeline that Rebosis Property Fund (https://www.sharenet.co.za/v3/quickshare.php?scode=REB) desperately needs. Rebosis has been hiving off assets to pay down debt, and a tie-up means it should be able to hang on to its remaining properties.
But Delta also stands to benefit from the potential deal. Economies of scale could help both landlords to weather the tough trading environment – they envisage that the combined entity will be the biggest black-owned and managed player in the sector, with office and retail assets worth R25bn.
Delta would gain exposure to the retail sector – although Rebosis’s retail portfolio has shrunk amid recent sales. That means Delta will be able to reduce its reliance on government-leased properties. SA’s public finances are under severe strain, so diversification is all the more important...