Pretoria - Redefine Income Fund, the property loan stock company, has acquired Rand Leases Property Portfolio (RL Props) for R349.5 million.
The transaction was concluded via Outward Investments, a wholly owned Redefine subsidiary, and increases the value of Redefine's property portfolio from R808 million to R1.2 billion.
Together with Redefine's investments in other listed securities, it raises its total asset base from R1.9 billion to R2.2 billion.
RL Props' portfolio comprises 27 investment properties, including prominently located commercial office blocks, with single or multitenanted occupancies, and three retail centres: The Post House and Wedge Shopping Centres in the Bryanston Wedge growth area and the Corporate Park Shopping Centre in Midrand.
Peter Penhall, Redefine's chief executive, said the purchase was to be settled with R6 million cash paid into a trust account; cash amounting to a maximum R267 million required to settle any outstanding mortgages; and the issue of Redefine linked units to Rand Leases and its property owning subsidiaries at an issue price of R2.47 each.
This would happen on the transfer date of each property, subject to a Rand Leases buy-back obligation.
'Rand Leases has agreed to repurchase from Outward Investments 14 million Rand Leases linked units. This buy-back is to be set off against Redefine's obligation to allot consideration units in a ratio of one unit for every 1.6 Rand Leases linked unit repurchased,' he said.
Penhall described the transaction as a win-win for Redefine, RL Props and the linked unit holders of both companies.
'We take over RL Props loans and ownership of a portfolio of well-tenanted, mainly A-Grade income-generating properties that offers ample scope for both income and asset growth under our management to the benefit of our linked unit holders.
'We retain an interest in RL Props while reducing our exposure to the property development business. As we will be liquidating outstanding mortgages over the properties, RL Props itself will have zero gearing and a highly liquid asset in the form of Redefine linked units, and the means to focus on its operational strength of land and property development.
Penhall said the short term influence on Redefine's net asset value was marginally weakened.
There was a good geographic spread in the portfolio acquired with no undue exposure in any one area. 'With one exception, leases were to a large degree for three to five years and longer. Vacancies represented 4.5 percent of gross area available to let, and had been partially discounted in the purchase price.'
Redefine closed unchanged at R2.50 on Friday.
Publisher: business report
Source: business report
Redefine acquires RL Props' portfolio for R350m.
Posted On Monday, 14 October 2002 10:01 Published by eProperty News
Pretoria - Redefine Income Fund, the property loan stock company, has acquired Rand Leases Property Portfolio (RL Props) for R349.5 million.
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