Fortress to acquire R1.1bn properties from Resilient subsidiary
Posted On Monday, 25 March 2013 07:59 Published by eProp@NewsFortress says a wholly-owned subsidiary has concluded agreements to acquire various retail properties from Resilient Property Income Fund for R1.1bn.
Listed property loan stock company Fortress Income Fund said on Friday a wholly-owned subsidiary had concluded agreements to acquire various retail properties from a wholly-owned subsidiary of Resilient Property Income Fund‚ for R1.1bn.
The acquisitions were in line with Fortress’ strategy of acquiring rural retail centres accessible to commuter transport‚ which had a strong national tenant profile‚ and which were anchored by a national grocer‚ Fortress said. The transaction would also enhance the quality of the property portfolio and increase Fortress’ retail exposure.
Fortress has had a strong focus on retail-centre assets situated around transport nodes‚ including taxi ranks and bus and railway terminals‚ targeting the fast growth in these markets. The transaction included Nelspruit Plaza‚ Rustenburg Plaza‚ Central Park Bloemfontein‚ New Redruth Village‚ an 82% undivided share in Sterkspruit Plaza and a 25% undivided share in Tzaneen Lifestyle Centre‚ as well as a loan to a development partner.
Resilient said on Friday its strategy was to own dominant retail centres with a minimum of three anchor tenants‚ and “although the properties being sold perform well and have excellent prospects‚ they do not fit Resilient’s strategy”. The transaction‚ subject to various conditions‚ is effective from July.
The purchase price will be settled by the payment of R531m in cash and the balance through the issue to Resilient of A- and B-linked Fortress units. Resilient already owns and controls 10.5% of the Fortress combined A and B linked units in issue‚ and as such the transaction required linked unitholder approval at a general meeting.
Also‚ as a portion of the purchase price was to be settled in Fortress linked units‚ the transaction required a statement by Fortress confirming whether the transaction was fair to linked unitholders and that the board had been advised so by an independent expert. A circular setting out further details of the transaction including the independent property valuations and the fairness opinion required‚ and containing a notice convening a general meeting of linked unitholders‚ would be sent to Fortress linked unitholders “in due course”‚ Fortress said.
Resilient said the cash proceeds from the disposal would be used to reduce interest-bearing borrowings‚ while the Fortress A- and B-linked units being issued to Resilient “will be retained by Resilient for the time being”.
Fortress CEO Mark Stevens said last month the fund would continue to focus on the retail market falling within the lower living standards measures (LSM) since many areas were still underserviced‚ even though this market was "starting to get a little bit cluttered".
Fortress reported 10.89% growth in distributions for the six months ended December and Mr Stevens said future growth would be supported Fortress’ now “significant” pipelines for refurbishments‚ extensions and new developments.
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