Redefine Properties sells its R1.45bn stake in listed Delta Properties
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.
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.
The head office of Redefine Properties in Rosebank, Johannesburg.