Emira Property Fund said yesterday it had finalised a scheme of arrangement that will result in residential-focused Transcend Residential Property Fund becoming wholly owned by Emira.
In 2018, Emira took its first 34.9% stake in the then JSE-listed REIT Transcend, thereby diversifying to include the value suburban multifamily residential rental property segment.
Emira CEO Geoff Jennett said their journey with Transcend was a success story for Emira.
“We partnered with the right asset management team to advance our diversification and earn good returns,” he said in a statement.
Since the initial investment, shifts in the market saw the appetite for small-cap stocks dry up and, being illiquid, there was no longer value in Transcend remaining listed. Emira responded by increasing its ownership in Transcend and bring it in-house.
Emira grew its holding in Transcend to 68%, eventually reaching 100% late last year. Subsequently, Transcend has been delisted from the JSE.
“We have converted a good indirect equity investment into a wholly owned subsidiary, adding another powerful lever to Emira’s diversified strategy,” he said.
Residential property now represents about 16% of Emira’s South African portfolio, although this would likely to change in line with market opportunities.
The transaction continued Emira’s track record of advancing its strategies incrementally, starting by taking an initial position in opportune investments.
This approach had played out advantageously in its take-up and subsequent sale of a stake in Growthpoint Properties Australia, and in its co-founding and sale of its stake in specialist retail fund Enyuka.
This tactic was also driving Emira’s incremental investment into the US, where its asset-by-asset capital allocation approach with in-country specialist co-investment partner, The Rainier Companies, had secured a 19% stake of Emira’s asset base offshore in equity investments of R2.8 billion comprising 12 open-air convenience shopping centres.