Redefine bags Leaf’s R4.1bn portfolio

Published Jan 29, 2015

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Roy Cokayne

JSE-LISTED Redefine Properties has acquired the property portfolio of Leaf Capital, an unlisted company with nine substantial property assets in Gauteng and the Western Cape, for R4.1 billion.

Marc Wainer, the executive chairman of Redefine Properties, yesterday described the Leaf Capital properties as a “trophy portfolio” and their acquisition as a “strategic triumph for Redefine”.

“It is underpinned by high-quality income streams from its large, excellently located, premium grade office precinct assets,” he said.

The stock exchange news service announcement of the transaction said the purchase consideration was R3.68bn plus non-property related fixed assets at their written down book value but minus its liabilities, including debt funding, and net working capital on the effective date and the estimated value of certain uncompleted maintenance capital expenditure.

Wainer said the major difference between the purchase consideration in the Sens announcement and in Redefine’s media statement related to the Black River Park office property in Observatory in Cape Town, which was 70 percent owned by Leaf Capital and 30 percent by a third party.

He said Redefine was acquiring full ownership of this property, which meant it could pay a further R300 million for the remaining 30 percent ownership in the building.

The purchase consideration equates to an initial income yield of 8 percent. Redefine will pay the purchase consideration to Leaf Capital through assumed third party debt of about R1.9bn, with 80 percent of the balance settled through a placement of shares and 20 percent funded from existing cash resources.

The transaction is still subject to Competition Commission approval and other conditions, but is expected to be effective from March.

The acquisition will substantially enhance Redefine’s office portfolio in the Western Cape.

“The transaction includes a number of significant properties such as Black River Park and the Wembly Square Development. These assets change the face of our Western Cape portfolio, which will now include the top 5 percent of quality office blocks in Cape Town,” Wainer said.

“This strategic transaction advances our strategy to grow a quality, diversified portfolio of properties that support sustainable and growing performance for our investors.”

Redefine’s shares slipped 0.09 percent to close at R11.50 yesterday.

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