Pivotal Property Fund confirms the intention by Redefine Properties to acquire all its issued shares

Posted On Tuesday, 30 August 2016 15:25 Published by
Rate this item
(0 votes)

The Pivotal Fund Limited (‘Pivotal’), a development focused property fund, today confirmed that it has entered into an agreement with Redefine Properties Limited (“Redefine”), in terms of which Redefine has offered to acquire all of Pivotal’s issued shares from Pivotal shareholders.

Jackie_van_Niekerk_at_Alice_Lane

Following the successful implementation of the transaction, Pivotal shareholders will hold 138.54  Redefine shares and 9.38 Echo Polsa Properties N.V. (“EPP”) shares for every 100 Pivotal shares held prior to the implementation thereof.

Notwithstanding the delivery to date of above average growth in net asset value, Pivotal, as a  development focused business, faces a number of external challenges with a stagnant domestic economy, an uncertain political landscape and a rising interest rate environment. Whilst Pivotal’s completed portfolio is expected to continue to perform satisfactorily, development activity is expected to remain constrained, affecting development returns in the short to medium-term. Consequently net asset value growth will be negatively impacted whilst the current economic conditions remain difficult.

As an alternative to the current development orientated structure of Pivotal, the scheme offers Pivotal shareholders the opportunity to convert to a REIT structure and receive Redefine and EPP shares from which Pivotal shareholders will benefit due to bi-annual income distributions, exposure to hard currency earnings, enhanced liquidity as well as continued exposure to Pivotal’s existing portfolio of A-grade properties.

Pivotal Chief Executive, Jackie van Niekerk commented: “As a development focused property fund, we consistently achieved a compounded annual rate of return of 27.8% from February 2012 to February 2016. Within a stagnant domestic economy and rising interest rate environment, we experienced significant pressure on our ability to generate satisfactory development profits and investment returns for our shareholders going forward.

“We subsequently came to a juncture where we had to weigh up the benefits of becoming a smaller-cap REIT in a highly congested sector, or merge with one of the largest REITs in the JSE’s listed property index.”

Irrevocable undertakings to vote in favour of the transaction have been received from some of Pivotal’s largest shareholders, representing c. 25.2% of the voting power.

Pivotal constituted a sub-committee of the Pivotal board of directors, comprising independent non-executive directors Chris Ewing, Tom Wixley and Tony Dixon to consider the terms of the transaction with independent corporate advisors.

Chairman of the independent board committee, Tom Wixley commented: “The independent board and Pivotal’s board recommend the transaction to shareholders as we believe it provides the best way forward for continued value creation in a stagnant economy and uncertain political environment.” 

Last modified on Tuesday, 30 August 2016 15:37

Most Popular

Mall of Africa Celebrates Launch of New Generation Pick n Pay Store

Sep 23, 2019
 MOA PNP  1
Today Mall of Africa welcomed one of South Africa's biggest grocery retailers to the…

Exemplar REITail Acquires Katale Square Shopping Centre

Sep 23, 2019
 JASON MCCORMICK
Real estate investment trust, Exemplar REITail, has acquired Katale Square shopping…

Grit Real Estate financial results for the year-ended 30 June 2019

Sep 30, 2019
 BRONWNY CORBETT
London Stock Exchange listed Grit, the only listed Africa-focused income distribution…

4AX listed Heartwood Properties reveals positive financial results

Sep 23, 2019
 JOHN WHALL
Commercial property development company, Heartwood Properties , has revealed a 30%…

Reserve Bank keeps repo rate unchanged

Sep 23, 2019
 LESETJA KGANYAGO
 South African Reserve Bank Governor Lesetja Kganyago on Thursday said this is in line…

Please publish modules in offcanvas position.