Desperate sellers get desperate outcomes
Rebosis is busy with a garage sale. Literally. The property fund needs to sell as many properties as possible in the business rescue process.
Now, if you've ever sold a property, you'll know that it isn't the easiest process. To make it more difficult, many of the Rebosis properties are office buildings with high vacancy rates. And to add final insult to the several existing injuries, Rebosis is a desperate seller.
Do you know what a desperate seller finds? Opportunistic buyers.
Enter a subsidiary of Heriot Investments, which has picked up a portfolio of assets from Rebosis at a price vastly below the independent valuation that was done on 1 April 2023 (the date is mildly funny). This doesn't necessarily mean that the valuation experts didn't do their jobs. If you look closer, you'll see that Rebosis sold the properties on a massive implied yield of over 26%.
This means that in theory, if the buyer can just maintain the current level of income, the payback on the properties is four years.
Moving on from desperate property funds, we find desperate consumers. I would far rather own a bank than an investment house in this country, evidenced by the difference in return on equity between Old Mutual and our local banks. Consumers don't have money, so one would logically rather lend to them than rely on them investing for the future.
But of course, it depends entirely on what valuation you pay for the shares. Much of the banking uplift was priced in this year, whereas Old Mutual was trading at a particularly modest valuation.
To see how that played out, here's Old Mutual's share price this year vs. its old flame, Nedbank:
