Redefine to add Pivotal to its stable

REDEFINE Properties, South Africa’s second-largest real estate investment trust (Reit), agreed to buy Pivotal Fund, valued at about R6.1 billion, in a share swop.

Shareholders in Pivotal would get 138.5 Redefine shares and 9.38 shares in Echo Polska Properties for every 100 Pivotal shares they owned prior to the eventual implementation of the transaction, the companies said in a joint statement yesterday.

Pivotal dropped 4.97 percent to R17.01 at the close of the JSE yesterday.

“Within a stagnant domestic economy and rising interest rate environment, we experienced significant pressure on our ability to generate satisfactory development profits and investment returns,” Pivotal chief executive Jackie van Niekerk said.

Benefits “We had to weigh up the benefits of becoming a smaller-cap real estate investment trust in a highly congested sector, or merge with one of the largest Reits in the JSE’s listed property index.”

The deal would add property worth R13bn to Redefine’s portfolio, expanding its premium office space offering and giving the company a total of 350 properties covering 6 million square metres, the Johannesburg-based company said.

Pivotal’s net asset value per share increased 24 percent to R22.80 and rental income jumped 57 percent in the year to February, the company said on May 25.

Redefine bought what is a 49.9 percent stake in Polish real estate company Echo Prime Properties (EPP) in March.

Pivotal owns 6.1 percent of Echo, according to company filings.

Redefine, valued at R57bn, raised R1.5bn in an accelerated book build on July 13.