Merger creates property group with almost R20bn capital
OUTLINING for new investors the implications of the now approved a nd c o mplet e d merg e r b e t ween Redefine Properties, Apex-Hi and Madison Property Fund Managers, Mike Flax, formerly of Madison and now a Redefine director, was bullish about the long-term prospects for the group.
However, he cautioned that for at least a year Redefine would have to cope with defaulting and struggling tenants, “like every other major property group in South Africa”.
“The reaction of the market to the merger had been complimentary,” said Flax. “Redefine’s shares have risen 27 percent this year to date to stand at more than R7. This reflects the company’s forecast that it will produce earnings between 70 cents and 74 cents a unit for the 2011 year, which will equate to a year-on-year growth in Redefine’s distributions of between 15 percent and 20 percent.”
He said the merged group would be larger than many property stock watchers realised: it would have a market capitalisation of almost R20 billion and should soon become an ALSI 40 company (among the 40 largest on the JSE Securities Exchange).
“The 400-plus properties in the group have a combined floor area of more than 3.5 million m2, making it one of the largest property owning groups in Africa.”
Flax said he and Brian Azizollahoff had been given responsibility for the growth of the company through acquisitions and disposals. Flax will also play a big role, along with Marc Wainer, in the international growth of Redefine through corporate acquisitions, which, he said, were expected to comprise more than 20 percent of the company’s assets before the end of 2010.
Flax said the global recession had opened up a variety of property acquisition opportunities for any strong South African company in this field, and Redefine was determined to diversify geographically in and beyond South Africa and away from exposure to only a single currency, the rand.
“We will be forming a separate acquisitions and disposal unit to create a key contact point for South African and international property brokers. Our aim is ongoing accret ive a c q u i s i t i o n s, ” s a i d F l a x . Another prime focus of the new company will be tenant retention.
“The company’s very large portfolio is typical of South Africa’s current property scenario and, like others, is now running with a 9 percent overall vacancy factor. Until the recovery period begins, we will initiate a number of measures to help ensure tenant survival and retention in our vast portfolio.”