Andrew Konig, CEO of Redefine, says that apart from realising a significant milestone in Redefine's investment strategy to improve the overall quality of its property portfolio, Redefine will in effect be switching the management of a large part of its government-let properties to proven managers in this area.
"In addition to substantially reducing Redefine's direct exposure to government tenanted office properties, this deal has several added benefits for our stakeholders. Redefine's shareholding in Delta will enable Redefine's participation in a broader government tenanted portfolio with less risk, potential dilution in distributable income is manageable through an orderly exit from Delta, plus Redefine stands to benefit from a potential rerating of Delta as a consequence of the transformative nature of this transaction," Konig Says.
Redefine is a listed Real Estate Investment Trust (REIT) and the second largest listed property company on the JSE by market value. Redefine property assets under management are valued at approximately R64.5bn.
Delta is a black-owned REIT that specialises in managing properties with a sovereign underpin. Redefine will have representation on the Delta board whilst holding 5% or more of Delta's issued shares.
The portfolio acquired by Delta comprises 13 commercial buildings and two parkades, leased to national and provincial government tenants in Johannesburg, Pretoria and KwaZulu-Natal.
The consideration will be settled in full by Delta through the issue of 162,043,079 shares. Redefine will be entitled to Delta share distributions from the effective date of the transaction, which will be the later of 1 March 2016, when transfer is expected, or the fulfilment of the usual conditions for a transaction of this nature. Redefine will dispose of the balance of its government tenanted portfolio on a deal-by-deal basis.
