The deal's value is based on SA Corporate paying Afhco about R278m and taking over R675m in debt. SA Corporate would acquire the Afhco share capital from the company's shareholders‚ consisting of 50% held by the Ideas Managed Fund‚ a policy product of Old Mutual Life Assurance‚ 35.5% by Wayne Plit and 14.5% by Renney Plit.
SA Corporate‚ with market capitalisation of about R8bn‚ is working through a turnaround strategy after years of under-performance.
Last month‚ it said this was on track‚ to increase its distribution to 8.6% in the year to December‚ in line with the sector average of about 8.2%.
It said most of the property portfolio consisted of office buildings converted into residential apartments‚ with a ground floor retail element of about 30% by gross lettable area. Its detailed due diligence on the properties had enhanced the rationale for its purchase.
"While the core rationale for the proposed transaction is to gain exposure to this fast-growing component of the residential property sector‚ this rationale has been further strengthened through potential opportunities to consolidate and further develop existing owned city blocks into precincts‚ which will significantly enhance the existing income producing property portfolio‚" it said.
"There were opportunities to expand on the retail offering in the inner city because of the density of the surrounding residential areas and the passing foot count‚" SA Corporate said.
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