Roy Cokayne

Listed Growthpoint Properties has acquired strategic shareholdings in two listed property companies as corporate activity in the sector intensifies.

Growthpoint reported yesterday that it had acquired a 34.9 percent stake in Acucap Properties and a 31.5 percent stake in Sycom Property Fund in a transaction valued at R4.66 billion.

Acucap Properties and Sycom are in the process of a proposed merger and Growthpoint’s acquisition of a strategic stake in both companies is a prelude to its proposed intention to acquire control of the merged company.

Norbert Sasse, Growthpoint’s chief executive, said Growthpoint, as a major investor in both entities, supported the merger plans currently on the table.

“We are exploring options and alternatives available to us to eventually take control of the merged entity, which we intend to discuss with management and the board of Acucap when appropriate,” he said.

Provided the merger between Acucap and Sycom proceeds, Growthpoint will hold about 38 percent of the merged entity once this initial transaction has been completed.

Sasse said this transaction had been under consideration by Growthpoint for some time, adding that it would further Growthpoint’s strategy of making dividend-enhancing acquisitions.

He said it would also provide Growthpoint with a strategic interest in, and indirect exposure to, Acucap and Sycom’s combined R18.4bn retail and office portfolios.

“Acucap and Sycom have one of the best retail portfolios in the market, which is aligned with Growthpoint’s aim to grow its overall balance of retail property.

“The acquisition is complementary and enhancing to the underlying quality of Growthpoint’s own portfolio, with strong synergies that also offer a platform of appealing opportunities,” he said.

The unconditional acquisition of the stakes in Acucap and Sycom by Growthpoint were achieved through agreements with various institutional unitholders of Acucap and Sycom in exchange for Growthpoint shares.

In terms of the transaction, Growthpoint has agreed to acquire about 64 million Acucap linked units at a switch ratio of 1.900 Growthpoint ordinary shares for each Acucap linked unit acquired and about 63 million Sycom participatory units at a switch ratio of 1.102 Growthpoint ordinary shares for each Sycom participatory unit acquired.

The issue and allotment of 148.85 million Growthpoint shares will take place on April 23 and 42.29 million Growthpoint shares on May 13.

The new Growthpoint shares will be listed at an issue price of R24.36 each, which was the spot price of a Growthpoint share at the close of business last Tuesday.

The transaction is one of several announced in recent weeks that will result in the consolidation of the listed property sector.

A potential merger between listed property companies Redefine and Fountainhead was placed back on the negotiating table last week when Fountainhead advised its unitholders the two companies had begun engaging about the possible terms of a potential merger.

Growthpoint and Redefine were until early last year involved in a bitter battle for Fountainhead’s assets, with Growthpoint in May withdrawing its offer for Fountainhead.

Redefine now owns 65.9 percent of Fountainhead after initially acquiring Fountainhead’s management company in 2012 for R660m.

Arrowhead Properties this month reported its firm intention to acquire all the issued units in listed Vividend Income Fund it does not already own.

Safari Investments RSA and Atlantic Leaf listed this month.

Growthpoint shares fell 1.80 percent to R24.55 yesterday.