Primegro - Richway acquisition PR rep

Posted On Saturday, 01 September 2001 03:01 Published by eProp Commercial Property News
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Derek Greenberg and Panico TheocharidesIn one of South Africa's biggest retail property deals, Primegro has bought up all of Richway's retail property assets for a net price, after costs, of R1,107 Billion. This transaction will increase Primegro's portfolio value to R2,5 Billion and push its market capitalisation up from its current R430 Million to just under R1 Billion. 'The deal was settled at cap rates which 
we believe are very attractive in current market circumstances' according to Primegro's joint MD's, Martin Ettin and Derek Greenberg. The acquisition takes effect from 1 January 2002.
R68 Million will also be paid to cover various acquisition costs. The linked unit component will be settled by Primegro issuing R411 Million worth of Primegro deferred linked units to Richway at an issue price of 670c on 1 January next year of which Richway will retain R155 Million worth of the Primegro linked units.
The gearing of R764 Million will be provided by a consortium of financial institutions being Nedcor Investment Bank, ABSA & BOE Bank Limited.
According to Greenberg this process was well advanced and expected to be successful.
Massive Opportunity Ettin says the acquisition is a 'wonderful deal when you consider the quality of the properties and the benefits they have for Primegro. Richway,
we believe, put together a prime retail portfolio, and we are delighted that this portfolio will now become a part of Primegro.'
Primegro's portfolio, which has always had an emphasis on retail, is acquiring dominant regional and sub regional centres, which are either at the beginning of their life cycles or undergoing extensive extensions.
'With the reduction in interest rates and personal tax, we should see the retail sector continuing to deliver improved results such as we have seen from the sector's giants in the last few months', Ettin maintains. 'Added to this is an aspiration spend from the emerging market which is becoming increasingly evident in the up-market regional centres' 'From our perspective' says Greenberg, 'the Richway component and all it brings with it, means greater investment interest. Most importantly, we will
have greater tradability and liquidity and Richway's shareholders will add to our free float. We strongly believe that our linked units will be re- rated. But, most importantly, our distributions should continue to be attractive with the unique interest-free gearing structure we have in Primegro'.
Greenberg points out that the Richway acquisition will only be minimally dilutionary in the first year. Richway's lease-expiry profile will impact positively on Primegro with its national tenants representing 84% of the portfolio by area and producing 71% of its income, as opposed to the current 50-50 split.
'Our spread, of approximately 63% retail, will increase to 73%. Our office component will drop from 23% to 15,9%, and the office / warehousing and commercial from 12,5% to 10,2%.
Lionel Levinsohn, Primegro's other Executive Director, is quick to point out that two years ago Primegro introduced a financial instrument into the market which was, and remains, unique to the listed sector.
'When property was out of favour, we acquired over a Billion rands worth of property. As a result, we have in place a very attractive financial instrument which includes an interest-free loan to Primegro of R266 Million for a further eight and a half years. This does wonders for Primegro's
growth and yield', he observed.
ENDS ISSUED BY: Bullion PR and Communications
Contact person: Lola Lazarus
Tel: (011) 803-3615
e-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.
ON BEHALF OF: Primegro (Pty) Limited
Contact person: Martin Ettin, Joint MD
Tel: (011) 778-4930
Mobile: 083 325 1463
Contact person: Derek Greenberg, Joint MD
Tel: (011) 778-4930
Mobile: 082 552 7244

Last modified on Thursday, 24 April 2014 15:47

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