Redefine to reduce its debt.

Posted On Wednesday, 29 January 2003 10:01 Published by eProp Commercial Property News
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PROPERTY loan stock company Redefine Income Fund has raised R136m to be used for debt reduction through a private placing of 54,6-million of its linked units at 250c a linked unit.

Property-Housing-ResidentialThe move represented a prompt reaction by Redefine management to concerns that the group's gearing was too high.

Redefine's gearing rose to 59% after the group concluded the acquisition of a R356m property portfolio from listed property fund Rand Leases Properties late last year.

Redefine's CEO Peter Penhall said the placement was a strategy designed to reduce debt that rose to an uncomfortable level when Redefine acquired a portfolio of 27 prime investment properties from Rand Leases.

'We said at the time of the Rand Leases transaction that our gearing level was too high, especially in the prevailing high interest rate environment, and that we would implement measures as quickly as possible to cut this back,' said Penhall.

'We are delighted that the market demand for Redefine linked units resulted in the overwhelming success of the issue for cash,' said Penhall. He said the placing would also enhance the ability of the Redefine linked units to be traded once the issue of linked units to institutions and individual investors had worked its way into the market.

He said the linked units were taken up by a wide spread of investors covering major financial institutions, small pension funds, fund managers and individual clients of stockbrokers.

The Rand Leases transaction boosted the value of Redefine's assets to about R2,4bn. The transaction also brought liabilities worth R252m to the group.

Rand Leases' debt represented a gearing of 71% against the property assets acquired. Penhall said the group had been aiming to lower its gearing to 55% and to attain a market capitalisation of more than R1bn.

He said the group had given itself a deadline of seven months to August this year to achieve the latter goals. 'Both have been reached within the first half year, which is good news for linked unit holders,' said Penhall.

Redefine's asset register reflects a combination of directly held property assets and interests in other listed property funds.

Redefine's linked unit price closed unchanged at 258c a linked unit on the JSE Securities Exchange SA yesterday.

Last modified on Tuesday, 06 May 2014 14:04

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