HYPROP TO SELL SA RETAIL UNITS TO PIC IN BILLION RAND DEAL
Leading listed retail property fund Hyprop Investments is set to dispose of its 46% stake in SA Retail Properties (“SA Retail”) to the Public Investment Corporation (“PIC”) for R1,135 billion, electing to exit the fellow property fund in a single cash transaction at a premium to the original acquisition cost. Hyprop initially acquired its stake in SA Retail at an average price of R9,43 a unit and will realise a surplus from the sale of over R100 million.
CEO of Hyprop, Pieter Prinsloo, says the transaction makes sound commercial sense. “Hyprop is not in agreement with SA Retail’s investment strategy and therefore strategically decided to exit the fund. In the interests of our unitholders we have sold for cash at a significant profit in a clean, swift manner and can utilise the proceeds to further our proven growth strategy.”
He explains that the deal will be earnings-enhancing as Hyprop will use the proceeds to repay all of its existing borrowings, making the R6 billion fund debt-free. “This will strengthen our financial position and enable Hyprop to leverage its borrowing capacity for acquisitions and continued expansion,” he says.
The deal with the PIC forms part of a proposed buy-out of SA Retail by SA Corporate Real Estate Fund (“SA Corporate”) (formerly Martprop Property Fund). SA Retail unitholders, including Hyprop, will exchange their units in SA Retail for units in SA Corporate. Hyprop’s SA Corporate units will then be purchased by the PIC. Prinsloo points out that in the event that the proposed buy-out of SA Retail by SA Corporate is not implemented by 30 April 2007, Hyprop is entitled to call on the PIC to purchase Hyprop’s units in SA Retail on the same terms. The PIC currently owns close to 10% of SA Retail.
Hyprop’s financial results for the year to December 2006 are due to be released at the beginning of March.
Hyprop units closed yesterday at R38,27 a unit.