Fortress Real Estate Investments said on Friday that its scheme to simplify its dual share structure into one was approved by shareholders.
The scheme would be done through repurchasing and cancelling all Fortress B shares in issue in exchange for shares of NEPI Rockcastle, at a share-swap ratio of 0.060207 NEPI Rockcastle shares per B share.
Once implemented, there will be a single class of ordinary share with no impediments to the declaration of distributions.
“We are grateful to our shareholders for their overwhelming support of the proposed transaction to simplify our capital structure. We have consistently emphasised the importance of simplification and specialisation,” Fortress CEO Steven Brown said.
He said in a statement that the vote represented a major step forward for Fortress.
“This single-share structure has a host of benefits, most notably the ability to unlock value as well as to attract investors with a vanilla single-equity share, which will be liquid and currently trades at a significant discount to its net asset value of about 40%,” he said.
He said while their shareholding in NEPI Rockcastle would reduce, Fortress would remain its largest shareholder with an investment of about R13 billion in a high-quality powerhouse in Central and Eastern Europe.
A single share allows for distribution of income at the discretion of the board without restrictions and in turn, dividend reinvestment programmes can be implemented.
A single-share structure offers greater flexibility regarding corporate actions and allows management to focus on the business rather than on issues resulting from the dual share structure.
In addition, shareholders could benefit from greater liquidity in a single share rather than having share liquidity spread across the two different classes, making it appealing to a broader range of potential investors.
“Our strategy of capital recycling through the disposal of older, under-performing properties to fund new developments which are in demand and have lower structural vacancies will continue in 2024,” said Brown.
“Our focus remains on completing new developments and letting of premium-grade logistics real estate in South Africa and Central and Eastern Europe as well as expanding our convenience and commuter-oriented retail portfolio,” he said.
Fortress also has a growing convenience retail portfolio, which comprises 46 shopping centres.