Redefine to gain from sale of portfolio to Delta
Redefine initially spent some time trying to sell 100% of its government-tenanted portfolio, because it had not been able to obtain a certain level of returns from the assets.
At the end of 2015 it struck a deal to sell 60% of the portfolio to Delta, in exchange for shares. By doing this, it effectively placed the sovereign-tenanted assets under the control of an asset manager with specialist expertise. The interest in the portfolio was sold to Delta for R1.25bn. As payment, Redefine acquired 162-million shares, equating to a 22.8% shareholding at R7.75 a share.
Redefine CEO Andrew Konig said the holding in Delta had been a consequence of that asset disposal.
Delta is currently trading on a distribution yield of 12.81%. Its share price is about R7.05.
Adrian Jardine, an equity analyst at Avior Capital Markets, said Redefine was set to benefit from the stake. "They will enjoy the distribution yield they get out of Delta without having to manage and spend capital expenditure on the government office portfolio."
Source: Business Day