Aegon purchase to boost Redefine

REDEFINE International is set to increase the value of its property portfolio by 50 percent through the acquisition of a R10 billion portfolio from the Aegon UK Property Fund.

The portfolio comprises 19 properties valued at £439.9 million (R9.2bn) that generate an annual passing rent of £23.5m.

By gross income, 45.2 percent of the portfolio comprises retail properties, 26.7 percent offices and 28.1 percent industrial.

In a separate transaction, the real estate investment trust that has a primary listing on the London Stock Exchange and an inward listing on the JSE, reported that it had exchanged contracts unconditionally with Aegon to acquire Banbury Cross Retail Park, comprising 17 retail units, for R1.09bn. The deal was expected to be completed yesterday.

The funding arrangements for these acquisitions might in the future result in the creation of an equal joint venture between JSE-listed Redefine Properties and Redefine International that owns the combined Aegon portfolio.

Redefine Properties is the largest shareholder in Redefine International.

The acquisitions follow Redefine International last week announcing the disposal of its entire remaining shareholding in Australian Stock Exchange listed Cromwell Property Group for a total of £172.8m, resulting in a net profit of £55.9m.

Mike Watters, the chief executive of Redefine International, described the acquisition of the Aegon portfolio as “a transformational deal” for the company.

The transaction rapidly nhanced the quality and scale of Redefine International’s overall portfolio, which supported their growth plans and strategy to generate consistent and growing income returns.

“It further cements our position as a leading rand hedge property stock for South African investors wanting to diversify their portfolio offshore,” he said.

Watters said the transaction offered the opportunity to efficiently recycle capital from non-core sales, adding the proceeds from the recent Cromwell disposal would be almost instantly redeployed.

The 20 assets acquired had a high overall occupancy of 96.7 percent.

Limited exposure

This was a sector to which the company had had limited exposure and was experiencing strong demand and rental growth potential, he said.

The acquisition of the Aegon portfolio is conditional on shareholder approval and an extraordinary general meeting is scheduled to take place in London on September 25.

The timing of the completion of the acquisition of the Aegon portfolio is split into two tranches, with the first comprising nine properties, which is expected to be completed on about October 2 this year at a purchase price of £203.5m.

The second tranche, comprising 10 properties, is expected to be completed on about March 1 next year at a purchase price of £233.7m.

Redefine International said a new £303m bank facility had been secured from a syndicate of banks, comprising a £155m term loan and £148m revolving credit facility, to assist in funding the acquisition.

Shares in Redefine International dropped 1.74 percent yesterday to close at R11.30.