EMIRA Property Fund said yesterday that it had inked a R637 million deal to sell its 49.9 percent stake in Enyuka Property Holdings to its venture partner, One Property Holdings, as it seeks to degear its balance sheet and eyes other capital re-investment opportunities.
By 4.10pm the share price had tanked 4.8 percent to R9.33, with the share price down 29.55 percent in the past three years.
Enyuka Property Holdings is Emira’s rural and lower LSM retail property joint venture.
Emira, which is a diversified real estate investment trust (Reit) invested in a portfolio of retail, office, industrial and residential properties, said the deal value represented a small premium to book value.
“Exiting Enyuka is a natural next step for Emira, which in 2016 contributed 15 rural retail assets from its direct portfolio into the Enyuka portfolio in exchange for the 49.9 percent shareholding. It teamed up with experts in this specialist area of retail property, One, to collectively derive more value and greater growth from the portfolio,” it said.
In the six years since, the jointly managed portfolio had achieved its objective of creating value for Emira shareholders, growing from 15 assets valued at R575m to 24 assets valued at R1.67 billion.
The original five-year plan for Enyuka included options to extend the agreement and for a partner buy-out. It was extended twice, for a year each time.
Geoff Jennett, the CEO of Emira, said: “The Enyuka joint venture has worked well – so well that our partners offered to buy us out. This is an attractive exit from a non-core investment for Emira at a good price in a single transaction.
“We weren’t actively looking to sell our Enyuka stake, but the offer from One has presented us with a great opportunity that is well-aligned with our stated strategies. The cash realisation enables us to redeploy the capital into our core strategies. It provides Emira with optionality in its capital allocation and agility to respond to clear and attractive market opportunities.”
The proceeds, equal to about 5 percent of Emira’s total asset base, will be temporarily deployed to reduce Emira’s gearing but will be immediately available for other capital re-investment opportunities, it said.
The transaction remained subject to several conditions being fulfilled.
BUSINESS REPORT ONLINE