BEE BUYER

Re­de­fine Prop­er­ties sells its R1.45bn stake in listed Delta Prop­er­ties

The Star Early Edition - - BUSINESS REPORT - Roy Cokayne

RE­DE­FINE Prop­er­ties, the listed di­ver­si­fied real es­tate in­vest­ment trust, has sold its 22.8 per­cent stake in listed Delta Prop­er­ties to a wom­en­led black eco­nomic em­pow­er­ment (BEE) con­sor­tium in a R1.45 bil­lion ven­dor-funded trans­ac­tion.

An­drew Konig, the chief ex­ec­u­tive of Re­de­fine, said yes­ter­day the group had pre­vi­ously made it clear that it wanted to dis­pose of the Delta hold­ing, be­cause it was a non-strate­gic asset.

Delta in 2015 ac­quired 15 gov­ern­ment-ten­anted of­fices from Re­de­fine through the is­su­ing of shares to Re­de­fine.

Re­de­fine has sold its en­tire hold­ing in Delta com­pris­ing 162 mil­lion shares at R9 a share.

The ven­dor loan will be 50 per­cent set­tled af­ter an ini­tial pe­riod of five years. At the con­sor­tium’s elec­tion, the loan could be ex­tended for a fur­ther three years.

Nooraya Khan, a mem­ber of the BEE con­sor­tium, said the trans­ac­tion would re­sult in Delta shares be­ing owned by long-term strate­gic in­vestors whose in­ter­ests were closely aligned.

“This deal de­liv­ers real trans­for­ma­tion trick­ling down to tar­geted ben­e­fi­cia­ries of BBBEE pol­icy, with the em­pha­sis be­ing to en­hance black women own­er­ship, and in­cludes a sig­nif­i­cant stake for man­age­ment and staff, which is key with all the changes tak­ing place in the prop­erty in­dus­try,” she said.

The ma­jor­ity black-womenowned com­po­nent of the con­sor­tium would own 51 per­cent and Delta’s man­age­ment and staff, the ma­jor­ity of which was also black, would own the re­main­ing 49 per­cent of the shares.

Phumzile Lan­geni, a non-ex­ec­u­tive direc­tor of Re­de­fine, was among the women par­tic­i­pants in the BEE con­sor­tium.

Win-win

Konig said the trans­ac­tion made sense on all fronts, was a win-win for both com­pa­nies and drove the ur­gent need to strengthen women and broad­based own­er­ship in the prop­erty sec­tor, while bring­ing about sig­nif­i­cant ben­e­fits for all par­ties.

Other ben­e­fits in­cluded a higher BBBEE rat­ing, which is es­sen­tial to meet gov­ern­ment re­quire­ments to se­cure longterm leases, staff re­ten­tion, and the re­moval of the po­ten­tial over­hang of Delta shares in the open mar­ket, he said.

“Re­de­fine re­mains firmly on course to re­alise its strat­egy of con­tin­u­ously build­ing an ex­cep­tion­ally di­ver­si­fied and qual­ity prop­erty plat­form, while man­ag­ing the eco­nomic risks so preva­lent to­day.

“We have man­aged to fa­cil­i­tate the sale of an illiq­uid counter in a sin­gle trans­ac­tion, lock­ing in cap­i­tal value and pre­serv­ing in­come flow.

“Strate­gi­cally, this trans­ac­tion achieves far more, as it ties in with our own trans­for­ma­tion ini­tia­tives to sup­port the devel­op­ment of fe­male lead­ers in the prop­erty sec­tor, while also boost­ing broader em­pow­er­ment,” he said.

The pub­li­ca­tion of the de­tails of the BEE trans­ac­tion co­in­cided with Re­de­fine re­port­ing the ac­qui­si­tion of an­other devel­op­ment site for stu­dent ac­com­mo­da­tion in Aus­tralia.

Re­de­fine has a A$139 mil­lion (R1.4 bil­lion) devel­op­ment un­der way in Mel­bourne that caters for 804 beds.

The new site at 500 Swanston Street is well lo­cated in re­la­tion to Mel­bourne Univer­sity and has the po­ten­tial to de­velop up to 700 beds.

Konig said the devel­op­ment was ex­pected to be­gin next year and cost A$103.3m.

Re­de­fine’s share of the devel­op­ment cost was A$93m, and it was look­ing to de­velop the site at an in­come yield of about 10 per­cent.

Konig added that the project was in line with Re­de­fine’s in­ten­tion to ex­pand its pres­ence in the pur­pose-built stu­dent ac­com­mo­da­tion mar­ket in Aus­tralia, build scale to de­velop a spe­cial­ist stu­dent ac­com­mo­da­tion fund and lever­age its in­ter­na­tional man­age­ment ca­pac­ity.

Re­de­fine shares closed un­changed on the JSE yes­ter­day at R10.52.

PHOTO: SIM­PHIWE MBOKAZI

The head of­fice of Re­de­fine Prop­er­ties in Rosebank, Jo­han­nes­burg.

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