Hyprop voters want SA Retail

Posted On Thursday, 14 July 2005 02:00 Published by eProp Commercial Property News
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The Hyprop share is up 2.3% to R24 buoyed by the booming property market - also the news that more than 60% of Hyprop unit holders are in favour of taking over rival property group SA Retail.

Pieter PrinslooThe Hyprop share is up 2.3% to R24 buoyed by the booming property market - also the news that more than 60% of Hyprop unit holders are in favour of taking over rival property group SA Retail. With Pieter Prinsloo from Hyprop, and Simon Pearse from Marriott Property

LINDSAY WILLIAMS: This has been going on for a while - rival Marriott Property Fund felt that Hyprop’s inability to secure a majority stake in SA Retail would cause Hyprop unit holders to vote against its bid - unit holders voted today?

PIETER PRINSLOO: One of the conditions of our offer was that we got the support from our unit holders today - the only remaining condition outstanding now is the approval from the Competition Commission. Once we’ve received that approval our offer will be formally open to SA Retail unit holders - and it will then remain open for 10-days.

LINDSAY WILLIAMS: In those 10-days what do you expect to happen? What do you think the SA Retail unit holders response will be?

PIETER PRINSLOO: I think we will have now a more positive response - now that they know we’ve got the support of our own unit holders and we’re a step closer to an unconditional offer. Indications are that we will at least achieve 40% - our aim is still to get a controlling stake in SA Retail.

LINDSAY WILLIAMS: You must have canvassed SA Retail unit holders - or the bigger unit holders - what the general response up to now?

PIETER PRINSLOO: Support up to now is around 37% to 40%. You probably know that there are a few big shareholders that aligned themselves with Marriott recently - but that’s not to say they won’t change their minds. There’s still time to change their minds - and accept our offer.

LINDSAY WILLIAMS: Your relationship with Marriott? Have you had contact with them at all?

PIETER PRINSLOO: We’ve had contact - they understand what we’re trying to do. Obviously they’re not supportive of it, but we’re certainly going ahead with our plans.

LINDSAY WILLIAMS: So you think it will be earnings-enhancing for your own unit holders? If it doesn’t go ahead are there any other property funds that you’re looking at - and do you think this is going to be the signal for a scramble for listed property assets?

PIETER PRINSLOO: Property assets are in quite short supply at the moment - and they’re also very expensive. We specialise in regional shopping centres - that’s the attraction of SA Retail for us. It’s unlikely that we’ll have the same opportunity in other funds. We believe there’s still strong growth in the regional shopping centre market - and we want the biggest stake of that sector.

LINDSAY WILLIAMS: Simon, what’s your reaction to what you’ve just heard?

SIMON PEARSE: Hyprop shareholders voted to go ahead with it. I’m quite surprised they voted to go ahead with it - considering they know that they’re not going to get a controlling interest in SA Retail. What it means is that SA Retail will stay listed - and Hyprop will really be a large unit holder in SA Retail.

LINDSAY WILLIAMS: So it’s an investment - rather than anything they can have any control over?

SIMON PEARSE: That’s the way it looks, yes - but it does have consequences. I’ll give you one example of a consequence - one of the listed funds called Redefine has almost 30% of SA Retail. In terms of this offer Redefine has committed to exchange their SA Retail units for Hyprop units. What that means is Redefine will own Hyprop units - who will in turn own SA Retail units - so you will have a hybrid of a hybrid, or maybe if you want to look at it as a fund of a fund of a fund. So you have three layers of fees - the investor coming into Redefine pays a layer of fees, then goes into Hyprop and pays a layer of fees, and then goes into SA Retail and pays a layer of fees. That doesn’t make a lot of sense for an investor - and that is a consequence of them going ahead with this. It surprises us that Standard Bank - who had the swing vote - has elected to not go with the other institutions like Mutual, Investec and Marriott that voted "no". Standard Bank - using their swing vote - have pushed it through.

LINDSAY WILLIAMS: In an ideal world what would you like to happen?

SIMON PEARSE: In an ideal world we had rather hoped today they would vote "no" and rather buy up the 5% to 7% that would take them from 34% to maybe 40% - buy it up on the markets rather than go through this process that stops SA Retail from buying property, and issuing units, and just continuing with their everyday business.

LINDSAY WILLIAMS: SA Retail shares closed unchanged today at R8.45 on a turnover of 134,000 while Hyprop shares were up 2.3% to R24.

Last modified on Tuesday, 06 May 2014 17:23

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