Hyprop's announcement follows a deal proposed on Wednesday that would see Martprop Property Fund and SA Retail co-owning the two funds' retail properties.

"It is our (SA Retail's) intention to acquire and develop all future retail properties in partnership with Martprop, and it's envisaged that the funds will participate in these investments in equal shares," SA Retail Properties MD Peter Sparks said on Wednesday.

In terms of the agreement, if a third party intended to strip the assets out of SA Retail, Martprop would have a pre-emptive right to those properties.

But Hyprop said it had notified SA Retail's board of directors that it would offer one Hyprop unit for every 2,7 SA Retail units at an implied price of R8,07 a unit, a 7,6% premium on the SA Retail trading price of about R7,50.

Hyprop MD Pieter Prinsloo said Hyprop had bought 5% of SA Retail's units over the past few weeks.

It had also secured an undertaking from listed property loan stock company Redefine Income Fund, which owned a 25% interest in SA Retail, to accept its offer.

Redefine is managed by Madison, which also owns a stake in Hyprop's management company.

Hyprop said the SA Retail and Martprop transaction was not in the interests of South African unitholders and constituted "frustrating action" in terms of the Securities Regulation Panel (SRP) code on takeovers, as SA Retail's board had reason to believe a takeover bid might be imminent.

The company said it would be making a representation to the SRP on the matter. Prinsloo said Hyprop wanted the SRP to issue a ruling that would see the SA Retail and Martprop transaction voted on by SA Retail unitholders.

SA Retail's Sparks said the group's board members would meet today to discuss the Hyprop offer and would be in a position to comment after the meeting.