Listed property loan stock company Acucap Properties said on Tuesday it would acquire a 33% interest in fellow listed property company Atlas Properties for R331,39m.

This would be Acucap's first major stake in another listed property company. Acucap MD Paul Theodosiou said the 33% was not a controlling stake but that it would give Acucap influence in Atlas.

"Our immediate objective is not control. We would like to work with (Atlas) management. The attraction for us is that it gives us an exposure to a very good quality retail portfolio (in Atlas)," said Theodosiou.

Acucap said Atlas' property portfolio had a 75% retail weighting and that, geographically, more than 80% of its properties were in Western Cape, including retail assets such as the Gardens Centre in Cape Town's City Bowl, a 50% interest in the Bayside Shopping Centre in Tableview, and the Howard Place Shopping Centre in Pinelands.

The company said Acucap's portfolio, which also had a retail weighting of about 75%, was largely Gauteng based and that the transaction would give Acucap a strategic exposure to some "prime Cape assets, particularly in the retail sector".

"This is a complementary portfolio with a similar exposure to retail but a good geographic fit in terms of national exposure," Theodosiou said.

Acucap said it had entered into an agreement dated October 21 with Hoanib in terms of which Acucap would acquire Hoanib's 33% holding in Atlas.

Theodosiou said Hoanib was the company that held the interest of the family of former Atlas chairman Peter Irvine, a respected player in the listed property sector, who died early last year.

Acucap will acquire 21,04- million Atlas linked units for R331,39m, or R15,75 a linked unit.

Theodosiou said this was a 10% premium to Atlas' current trading price.

The price will be settled by the issue of Acucap linked units and Acucap has agreed to place the consideration units on behalf of Hoanib prior to the effective date of the transaction, November 30.

Angelique de Rauville, MD of Investec Listed Property Investments, said the group was aware of the fact that "there was this sizable line of Atlas units in place so the deal does not come as an enormous surprise".

"We have not established what Acucap's intentions are with the Atlas units but given that their stake is below 35% at this stage, they are not required to make a mandatory offer to Atlas' minority unitholders.

"But having said that, we believe that major consolidation of the listed property sector is under way and that this transaction could eventuate in some corporate action with specific reference to merger or acquisition activity," de Rauville said.

It was difficult to say whether the deal was advantageous to Acucap because there was limited information on the deal.

She said the intention was for Acucap to settle with the seller of Atlas units with the issue of new Acucap units at an undisclosed price.

Andre Stadler, MD of Catalyst Fund Managers, said he thought the deal "made sense for a company like Acucap".

Business Day
Publisher: I-Net Bridge
Source: I-Net Bridge