Rebosis is in the process of selling a substantial property portfolio to Ulricraft for R6.32 billion, an injection of cash that Rebosis desperately needs.

You’ve probably never heard of Ulricraft. I suspect you’ve heard of Vunani, though. Ulricraft is a special purpose vehicle wholly owned by Vunani Capital Partners. If this transaction goes ahead, then Vunani is expected to hold a small stake in Ulricraft after making space for other equity funders.

The key condition precedent was that Ulricraft needed to perform a detailed due diligence. In particular, the sales agreement made provision for an adjustment to the purchase price based on any changes to the individual estimated net operating income (NOI) for each property.

The deal was originally based on a yield of 9.5%, so the value of each property was the NOI divided by 9.5%.

A further critical point was that the parties could choose to change the mix of properties included in the deal. Provision was also made for an adjustment to the individual purchase prices i.e. the yield.

The good news is that the due diligence has been completed to the satisfaction of both parties. The bad news is that the deal is much smaller than originally envisaged.

After the exclusion of 11 properties from the deal, the total deal value is R3.35 billion at a blended yield of 9.4% for 21 properties. Within the list of 21 properties, there are seven that still have further conditions attached to the sale. This means that R1.17 billion of the price isn’t guaranteed.

There may still be a deal for the excluded assets, provided the purchaser can execute a capital raise and meet other conditions.

The most important condition of all is that the purchaser needs to obtain finance for the R3.35 billion initial deal before 22 April 2022. That is less than one month away and the clock is ticking.

The clock is also ticking for the Rebosis balance sheet, with the share price having lost over 98% of its value in the past five years. It rallied 9% on Friday at this hint of good news.