Redefine, Annuity given Merger Green Light

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Redefine Properties' purchase of R2.1 billion takeover of Annuity Properties, has been approved. File Photo: Panico Theocharides joint CEO at Annuity seen with Redefine CEO Marc Wainer and Derek Greenberg joint CEO at Annuity. Redefine Properties' purchase of R2.1 billion takeover of Annuity Properties, has been approved. File Photo: Panico Theocharides joint CEO at Annuity seen with Redefine CEO Marc Wainer and Derek Greenberg joint CEO at Annuity.

Redefine Properties' purchase of R2.1 billion takeover of Annuity Properties, has been approved by the Competition Commission and unitholders today.

The listed property sector has experienced significant consolidation since late last year, following a slew of new listings over the past 18 months to two years.

In a statement, SA's second largest real estate investment trust, Redefine Properties said that it has received unconditional approval from the Competition Commission to conclude the acquisition of the entire issued share capital of Annuity Properties as well as Annuity’s asset and property management companies.

Annuity unitholders also gave their approval for Redefine to acquire the entire issued share capital of Annuity by way of a scheme of arrangement on 13 May 2014.  These approvals mean the transaction can now be finalised.

In March, Redefine surprised the market by announcing its acquisition of Annuity Properties.

According to the offer, Redefine would acquire the entire issued share capital through a scheme of arrangement, and also Annuity’s asset and property management companies.

Annuity linked unitholders would receive 57.752 Redefine linked units for every 100 Annuity linked units. Redefine would issue 136.6-million linked units. Redefine would also acquire the management companies for a cash consideration of R103m.

Annuity’s R2.1 billion property portfolio has been priced at 8.5% income yield in an environment of scarce investment opportunities.

This acquisition will be effective from 1 March 2014 and Annuity linked unitholders will be entitled to the Redefine income distribution from this date.

Annuity listed on the JSE in May 2012 and its tenants include some of South Africa’s better known companies. Annuity owns Sasfin’s head office in Waverley, Johannesburg, and the Woolworths call centre in Cape Town.

Redefine CEO Marc Wainer says Annuity portfolio significantly advances Redefine’s investment strategy in a single transaction.

"It provides excellent synergies, with 80% of its properties meeting Redefine’s investment criteria of which 30% of the portfolio comprises retail assets, which furthers Redefine’s objective for increased exposure to this sector,” he says.

In that vein, Wainer recently made comments that plans for a full merger with Fountainhead were on track‚ with Redefine likely to make an offer to Fountainhead shareholders “within the next two to three weeks once necessary regulatory approvals are in place’’.

Mr Wainer said the target was to have the merger completed by August. For the merger to go ahead‚ 75% of all remaining Fountainhead shareholders must vote in favour of a takeover.

Redefine has a market capitalisation in excess of R30 billion and controls a diversified portfolio of property assets of R44.5 billion.

The company’s local investment assets comprise 253 diversified directly held properties valued at R25.4 billion, while Fountainhead Property Trust, in which Redefine has a 65.9% equity interest, has an R11.8 billion retail-focused property portfolio.

Redefine is also geographically diversified with R6.6 billion invested offshore and holds 32.9% stake in Redefine International P.L.C which is listed on both the London Stock Exchange and JSE.

It further holds 12.8% in Cromwell Property Group, which is listed on the Australian Securities Exchange Limited (ASX),

Read more on:

Listed Property / REITs  |  Redefine Properties  |  Annuity Properties  |  Marc Wainer  |  Fountainhead Property Trust  |  Mergers and Acquisitions  |  Panico Theocharides  |  Derek Greenberg