Listed property loan stock company Vukile Property Fund said on Tuesday (12 March) its agreement with Encha Properties is "one of the most significant Black Economic Empowerment (BEE) initiatives to date".
Vukile said it would acquire a portfolio of five investment-grade‚ predominantly government-tenanted properties from Encha for about R1.4bn.
After the transaction‚ Encha will own a R600m stake in Vukile - representing a holding of about 7.5% in the company's enlarged unit capital. "For purposes of the Property Sector Charter‚ this will represent a holding of about 25% in Vukile‚ after adjusting for mandated investments‚" Vukile said.
The properties in the portfolio comprise Navarre Wachthuis‚ the Koedoe Arcade and De Bruyn Park in Pretoria as well as the Pretoria Momentum building and the Bloemfontein Fedsure building.
A "sub-portfolio" would be established within Vukile to house the new properties as well as any other government-tenanted properties that Vukile may own or acquire. Encha would be appointed as the property and asset manager of the new sub-portfolio.
In addition‚ Encha's chief executive and current president of South African Property Owners Association Sedise Moseneke would join the borad of Vukile‚ the company said.
As well as having executive responsibility for driving Vukile's overall transformation strategy‚ Moseneke "will oversee the government-tenanted portfolio and will work together with Vukile chief executive Laurence Rapp in growing the fund in line with the company's strategy of building a large diversified property fund".
Rapp said Vukile believed the deal "has tremendous benefits for the company in that it allows it to implement a sustainable transformation transaction that is done in a commercially viable manner, will enhance earnings and create long-term alignment between our stakeholders".
"We are delighted to be partnering with Encha which has significant experience and a solid track record in managing a successful government-tenanted portfolio. I welcome Sedise to our management team and look forward to working with him‚" Rapp said.
The purchase price comprises a cash payment of about R800m‚ "which will be used by Encha to repay bank debt and amounts due to other third parties"‚ Vukile said.
The remaining R600m would be funded by issuing Vukile units to Encha for an initial amount of R470m and is expected to increase by a further R130m in December when certain lease extensions are concluded.
A special purpose vehicle had also been created within Encha to assist it in acquiring more Vukile units and to ensure that Vukile's empowerment credentials were not diluted through future rights offers or issues of shares‚ Vukile said.
The acquisition is expected to be effective from July‚ once a number of conditions precedent have been fulfilled.
I-Net Bridge For more than two decades, I-Net Bridge has been one of South Africa’s preferred electronic providers of innovative solutions, data of the highest calibre, reliable platforms and excellent supporting systems. Our products include workstations, web applications and data feeds packaged with in-depth news and powerful analytical tools empowering clients to make meaningful decisions.
We pride ourselves on our wide variety of in-house skills, encompassing multiple platforms and applications. These skills enable us to not only function as a first class facility, but also design, implement and support all our client needs at a level that confirms I-Net Bridge a leader in its field. Go to: http://www.inet.co.za
LEGAL DISCLAIMER: This Message Board accepts no liability of legal consequences that arise from the Message Boards (e.g. defamation, slander, or other such crimes). All posted messages are the sole property of their respective authors. The maintainer does retain the right to remove any message posts for whatever reasons. People that post messages to this forum are not to libel/slander nor in any other way depict a company, entity, individual(s), or service in a false light; should they do so, the legal consequences are theirs alone. Bizcommunity.com will disclose authors' IP addresses to authorities if compelled to do so by a court of law.