Real estate merger to form JSE giant

THE much-anticipated merger of New Europe Property Investments (Nepi) and Rockcastle Global Real Estate looks set to go ahead, with the announcement of a deal on Wednesday that should create the largest listed property company on the JSE.

It will create a combined Eastern European-focused retail property fund with a market capitalisation of R81-billion that, based on current prices, would make it the largest property company on the JSE.

Nepi, which has a market capitalisation of nearly R51.7-billion, invests in Romanian shopping centres.

Rockcastle Global Real Estate, worth nearly R33.7-billion, is focused on Polish commercial property.

They will merge into Nepi Rockcastle (NewCo) through a share swap ratio of 4.5 existing Rockcastle shares for one existing Nepi share.

Nepi and Rockcastle have recently invested in markets other than their main focuses and commentators said in August a merger would help both to find new opportunities.

The two companies were launched by a number of professionals from South Africa’s Resilient group of property companies.

“NewCo is expected to have a substantially enlarged market capitalisation, with all Nepi and Rockcastle shareholders benefiting from enhanced liquidity.

“The merged entity is expected to become the largest listed real estate player in Central and Eastern Europe,” Nepi and Rockcastle said.

Investec Asset Management portfolio manager Peter Clark said the merger had been widely expected.

It would create a company with a ß5.5-billion (R80-billion) market cap that would have long-term benefits for shareholders.

“This will be the sixth-largest listed real estate company in continental Europe, and the largest listed real estate company on the JSE.

“Given its size, it will be hard to ignore for South African and European real estate investors.

“We see limited direct operational synergies [from] day one, given the different locations of the portfolios.”

Cratos Capital money manager Ron Klipin said the deal represented the end of an era in which the Resilient group of property companies “finally achieved their vision of combining similar entities”. – BDlive