HYPROP INDICATES INTEREST IN ACQUIRING FURTHER UNITS IN SA RETAIL
Ratcheting up its stakeholding in rival SA Retail, leading listed retail property fund Hyprop Investments has indicated its interest in taking up a further 9,7 million linked units in SA Retail. With Hyprop currently holding 45% of SA Retail linked units, the additional units would take the fund to a 49% stake. Hyprop intends to pay an attractive R11 for each SA Retail linked unit, with an alternative invitation to swap every 2,7 linked units in SA Retail for one Hyprop combined unit.
Hyprop’s interest in acquiring the additional SA Retail units is incorporated in letters sent to SA Retail unitholders and fund managers. Hyprop MD Pieter Prinsloo points out that this does not constitute a formal offer in terms of the Securities Regulation Panel rules, but merely reflects Hyprop’s intention to negotiate the purchase of SA Retail linked units with willing sellers.
Quantifying the advantage for SA Retail unitholders, Prinsloo says: “With SA Retail units trading on the JSE at around R10.15, our intended cash price of R11 a unit reflects an 8.4% premium and a 14.8% premium to the volume weighted average traded price over the 72 days to Friday last week. Our swap also carries an 18,6% premium – based on Hyprop’s current trading price of around R32,50 a unit, 2,7 SA Retail units would equate to an imputed value of around R12.00 a unit.”
He adds that SA Retail unitholders who enter into the unit swap will remain invested in a retail property fund, but with the benefit of Hyprop’s strong rating which significantly outweighs that of SA Retail. Prinsloo is confident of Hyprop’s leading track record in the listed property sector driven by its ongoing delivery to investors of sustainable income and capital growth. “Further, Hyprop’s liquid combined units present trading opportunities absent in SA Retail’s linked units which, for instance, have only traded on 21 of the 72 trading days to the end of last week.”
“Hyprop is keen to secure its stronghold in SA Retail and increase its strategic input,” says Prinsloo, referring by way of example to Hyprop’s blocking of a resolution at the last general meeting that successfully prevented SA Retail from issuing units for cash.
Prinsloo is optimistic that fund managers of third-party institutional investments in SA Retail will carefully consider the benefits to the investors of Hyprop’s invitation to sell and will act in the best interests of their clients when advising on the matter.