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Octodec and Premium merger receives shareholder approval

Posted On Friday, 01 August 2014 14:11 Published by
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Merger to become effective in September 2014; Combined portfolio to be valued at R10bn and offer significant exposure to the residential sector.

Jeffrey Wapnick

JSE listed REITs Octodec and Premium today announced that they have secured the requisite shareholder approvals to effect the merger of the companies. 100% of the respective Octodec and Premium shareholders represented at the general meetings voted in favour of the offer.

The successful implementation of the transaction will result in Premium and IPS becoming wholly-owned subsidiaries of Octodec. IPS has a complementary portfolio and is owned 50% each by Premium and Octodec. The combined fund will attract a market capitalisation in excess of R5 billion and comprise 325 properties valued at approximately R10 billion.

Commenting on the results of the general meetings, Jeffrey Wapnick, Managing Director of both Octodec and Premium, said: "We are pleased with the support received from our shareholders. We are now one step closer to creating a sizeable company offering an attractive investment proposition backed by a solid track record of delivery, a healthy projects pipeline and strong asset mix concentrated in the high growth nodes of the Pretoria and Johannesburg central business districts."
Post-merger, Octodec will offer investors exposure to an attractive mix of retail, office and industrial assets as well as significant exposure to the residential sector, relative to any other REIT listed on the JSE.

Anthony Stein, Financial Director of both Octodec and Premium, added: "The scale of Octodec will facilitate improved liquidity and, in addition to the existing facilities already in place for both entities, enable access to fresh capital at more attractive rates."

The merged entity is expected to attract interest from a wider group of investors, including tracker funds and international investors. Further, it is anticipated that it will also result in more advantageous funding rates and an improved credit rating being obtained. All of these factors will support Octodec in the execution of its growth strategy through further yield-enhancing upgrades, redevelopments and acquisition opportunities across the portfolio.

"Today's results show that our shareholders share our view that a combined entity makes strategic sense. Both companies share a number of administrative and operational services and have complementary portfolios. Ultimately, the merger will support our objective to deliver above-average returns and growing distributions for our shareholders," concluded Sharon Wapnick, Chairperson of both Octodec and Premium.

The swap ratio of 88.5 Octodec shares per 100 Premium linked units was determined by taking into account historical volume weighted average prices (VWAPs) for both companies as well as forecast distributions and the net asset values of both companies.

Kerry Sher, principal at Nedbank Capital Corporate Finance said, "By acting as corporate advisor, investment bank and sponsor to the merger of Octodec Investments Limited and Premium Properties Limited, we are proud to be assisting the property group to achieve its long-term strategy and growth plan."

The proposed transaction is still subject to a number of conditions, including the approval by the Competition Authorities and other regulatory approvals. Based on the current timeline, the proposed transaction is expected to be finalised in September 2014.


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