Redefine has concluded an agreement with Standard Bank Properties (Pty) Limited and Liberty Holdings Limited to acquire the management company of Fountainhead Property Trust for a purchase consideration of R660 million.

The acquisition is conditional on all regulatory approvals, including Competition Commission, FSB and South African Reserve Bank.

Redefine CEO, Marc Wainer said that following the requisite regulatory approvals being obtained for the acquisition of the management company, Redefine would formulate an offer for the acquisition of the Fountainhead assets. This would require the support of Redefine and Fountainhead unit holders and would be conditional on a due diligence investigation as well as all requisite Board, Trustee and Regulatory approvals.

Redefine envisages pricing the offer so that Fountainhead unit holders will receive approximately the current “clean price” at which Fountainhead units are trading and that the purchase price would be settled by way of Redefine issuing to Fountainhead unit holders Hyprop and Redefine units.

Wainer says that this acquisition, if it receives the necessary unit holder support, will largely complete the transformation of Redefine’s portfolio and also see Redefine exit its 30% shareholding in Hyprop.

The Hyprop shareholding exit will effectively be replaced with high quality retail Fountainhead assets and Redefine’s mix of properties will then comprise approximately 51% retail, 37% office and 12% industrial after conclusion of the acquisition.

“The quality of most of the Fountainhead assets fit Redefine’s investment profile although there are approximately 30 to 35 very small properties that Redefine would over time probably dispose of,” says Wainer.

The property management function, which is currently outsourced to third parties, would in time be handled in-house by Redefine, which has the necessary resources as well as a highly skilled retail team. It is envisaged that the transaction should be earnings enhancing to Redefine and also advantageous to Fountainhead unit holders.

Wainer stressed, understandably, that at this point in time the acquisition that has been concluded is only in respect of the management company and that prior to any offer being made for the  Fountainhead assets,  Redefine would have to conduct a detailed due diligence.