Angelique de Rauville, MD of listed property portfolio management company Provest, said on Friday that the acquisition was a strategically good move because the listed property sector needed to "consolidate to create larger, more liquid funds" that appealed to international investors.
ApexHi and Prima announced on Thursday that ApexHi has made an offer to acquire the property portfolio of Prima Property Trust for R996,2-million.
The amount would be settled by the issue of 37989144 ApexHi A units and 37989144 B units at R20 a combined unit and R236,4-million in cash.
The deal will boost ApexHi's property asset base to more than R5-billion and make retail property dominant in its portfolio.
De Rauville said ApexHi's offer was "very attractive" to Prima unitholders. Prima would have battled in the current property market to build up its portfolio.
"There are many private investors investing in Prima's niche market of R2-million to R15-million properties. Prima unitholders will now have an investment in the far larger portfolio of ApexHi offering critical mass, which is good for risk diversification and liquidity."
Andisa Securities property analyst Len van Niekerk said that, strategically, Prima found itself in a bit of a "troubled spot". "Their strategy of buying properties at less than R15-million becomes problematic in a market where property prices are rising. It could lead to a situation where Prima would acquire lower-quality properties," said Van Niekerk.
He said the price being offered was fair, because it translated into about R1,25 for every Prima unit. The current Prima unit price is R1,22.
But what reduced the benefit to ApexHi was that it would carry the costs of unwinding Prima. "The benefit to ApexHi over the first 12 months is marginal to slightly negative, but it does have certain benefits of reducing overall risks in the portfolio and providing them (ApexHi) with additional growth opportunities."
