| Tue 16 Jan 2007, 17:03 | | SAC - SRL SA Corp / SRL - SA Retail - R5 Billion F |
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SAC SRL
SAC SRL
SAC - SRL SA Corp / SRL - SA Retail - R5 Billion Fund In The Making As SA
Corporate Bids For SA Retail
SA Corporate Real Estate Fund
(formerly Martprop Property Fund)
(Incorporated in the Republic of South Africa)
Share Code: SAC & ISIN Code: ZAE000083614
A Collective Investment Scheme in property
registered in terms of the Collective Investment Schemes Control Act, No. 45
of 2002 and managed by
SA Corporate Real Estate Fund Managers Limited
(formerly Marriott Property Fund Managers Limited)
(Registration number 1994/009895/06)
("SA Corp" or "the Fund")
SA Retail Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number 1999/025764/06)
Share Code: SRL & ISIN Code: ZAE000034328
("SA Retail")
R5 BILLION FUND IN THE MAKING AS SA CORPORATE BIDS FOR SA RETAIL
SA Corporate Real Estate Fund (formerly Martprop) has announced it is to
make an offer to acquire all the linked units in SA Retail Properties
Limited, paving the way for a R5 billion fund in a major move towards
consolidation in the listed property sector.
The announcement said the proposed transaction, to be implemented in terms
of section 440 of the Companies Act, had the backing of unit holders holding
70% of the SA Retail linked units.
The offer is subject, among other conditions, to SA Corporate procuring
acceptances from those holders of at least 90% of the SA Retail linked units
in issue.
SA Retail unit holders who accept the proposed offer will receive 3.05 new
SA Corporate units for every one offer linked unit held. Based on SA
Corporate`s intraday market price of R3.55 per linked unit on January 12,
the business day on which the offer was made, this represents a premium of
8,3% to the 1 000c for a SA Retail linked unit on the same day.
If the offer is successful, SA Retail will be delisted and become a wholly-
owned subsidiary of SA Corporate. SA Retail linked unit holders will
participate in SA Corporate distributions declared in respect of SA
Corporate financial years commencing January 1, 2007, with future SA Retail
distributions accruing to SA Corporate.
SA Corporate was ranked last year by the Investment Property Databank (IPD)
as one of the top five listed funds for its total return on direct property
- with an average of 22% per year over three years for offices and 27% per
year over three years for industrial premises.
Craig Ewin, head of listed property asset management at Old Mutual Property
Group, which manages both SA Corporate and SA Retail, says that the
acquisition will benefit both sets of unit holders in creating a more
substantial, diversified and liquid fund.
"It will also resolve the difficulties that SA Retail has experienced in
recent years as a consequence of poor liquidity, with five holders of 98% of
the total SA Retail linked units in issue and average tradeability at around
14% of linked units in issue for the last three years. As a consequence of
being so tightly held by a limited number of unit holders, SA Retail has
recently been removed from the SAPY index.
In contrast, SA Corporate has more than 4 000 unit holders and average
tradeability of more than 50% of units in issue for the last three years."
Ewin says consolidation in the listed property sector is becoming the order
of the day and that fewer, larger funds will dominate.
"We believe that a consolidated portfolio in SA Corporate will be the
platform upon which a substantially larger fund will be built and that SA
Corporate is ideally positioned to compete with the largest funds in the
sector in delivering superior returns to unit holders. There is also the
prospect that unit holders could benefit from meaningful capital
appreciation. Should the consolidated SA Corporate yield firm in line with
its peers which have market caps in excess of R5 billion this will introduce
attractive value upside for both sets of unit holders."
Roger Perkin, managing director of SA Corporate, says the acquisition of SA
Retail will give rise to a portfolio profile that has a greater alignment
with the IPD indices and which will offer greater tenant and property
diversification.
"SA Retail has a high quality portfolio of retail properties, valued at some
R2,3 billion which will complement the existing R2,7 billion SA Corporate
portfolio. SA Corporate currently has a premium quality industrial
portfolio, which constitutes some 62% of the fund. Retail properties make
up 28% of the fund, with offices the remaining 10%.
The greatly enhanced market capitalisation of SA Corporate will further
improve the fund`s liquidity and elevate it to one of the largest counters
in the sector.
This will position SA Corporate well in respect of future investment demand
and ideally result in the successful raising of both domestic and foreign
capital as the portfolio is expanded," says Perkin. "There are obvious cost
economies that accompany such an acquisition and SA Corporate unit holders
will benefit from these savings, as well as from the opportunity for the
fund to access more competitively priced securitised debt."
He says the two funds are co-owners of several properties, including
Musgrave Centre, Umlazi Megacity and Knowles Centre in Durban, Highlands
Mews in Witbank, and Tokai Junction in Cape Town.
Peter Sparks, managing of SA Retail, says the board has appointed an
independent sub-committee to assess the offer. An independent adviser will
advise whether the terms and conditions of the offer are fair and reasonable
to SA Retail linked unit holders.
He says SA Retail which lifted interim distributable income to September
2006 by 13.7%, will continue to pursue transactions it has in its pipeline.
This includes the R1 billion Sharemax portfolio which it expects to take
ownership of in March 2007.
"If the offer is accepted, then proposed developments and transactions will
unfold with SA Retail as a wholly-owned subsidiary of SA Corporate."
Ends
Date: 16/01/2007 17:03:02 Produced by the JSE SENS Department.
