HYPROP SET TO TRUMP MARTPROP WITH TAKEľOVER OF SA RETAIL
Leading property loan stock Hyprop Investments today announced its intention to acquire all of the linked units in listed property fund SA Retail Properties, putting paid to recent speculation about SA Retail’s future. Hyprop has notified SA Retail’s board of directors that it will offer one Hyprop unit for every 2,7 SA Retail units at an implied price of R8, 07 a unit - a 57 cents (7,6%) premium on the current trading price of around R7,50.
Hyprop already owns 11,4 million, or 5%, of SA Retail’s units and has in addition secured an undertaking from Redefine Income Fund to accept its offer. Redefine’s 55,9 million units equate to around 25% of SA Retail’s unitholding.
Hyprop MD Pieter Prinsloo says that the acquisition makes strategic sense for Hyprop. “SA Retail units are trading at a discount to Hyprop’s units and present us with a growth opportunity that will boost our retail portfolio and earnings.” He says that the acquisition will also benefit SA Retail unitholders. “They will receive an attractive price for their units, higher than the current trading price. The nature of their investment in a retail property fund will remain the same but will be through Hyprop which has a higher rating than SA Retail.” He emphasises that the offer will enable SA Retail unitholders to take a significant holding in a quality stock that will enhance their distributable income.
Prinsloo is confident that SA Retail unitholders will see the sustainable value of Hyprop’s offer which he says surpasses the proposed deal between SA Retail and Martprop announced yesterday. Hyprop will be making representations to the JSE to have the Martprop proposal correctly categorised as a category 1 transaction for SA Retail, which in terms of JSE Regulations cannot be implemented without the approval of SA Retail unitholders.
He also points out that all SA Retail unitholders will receive the distribution due to be paid to them in May, irrespective of whether they accept Hyprop’s offer before the payment date. “Hyprop has undertaken from the outset to take-up the SA Retail units ‘ex distribution’.”
Prinsloo says that Hyprop will apply its retail expertise to maximise the value of SA Retail’s assets and its asset management skill to reduce costs. “This will ensure the ongoing growth of SA Retail’s assets, supported by Hyprop’s track record of sustainable income and capital growth,” he says.
Hyprop will issue renounceable letters of allocation to SA Retail unitholders which will automatically convert into Hyprop combined units on 4 July 2005, after payment of Hyprop’s next distribution. The JSE has approved the listing of the letters which will be fully tradable on the JSE before conversion into Hyprop combined units.
The offer remains subject to the necessary approvals of Hyprop unitholders and the Competition Authorities. Detailed circulars will be posted to SA Retail and Hyprop 2 unitholders and Hyprop will trade under cautionary until a further announcement on the financial effects of the offer is made.
Hyprop boasts Canal Walk in the Western Cape and Hyde Park Centre, The Mall of Rosebank and The Glen Shopping Centre in Gauteng in its retail portfolio. SA Retail’s portfolio includes East Rand Galleria, Musgrave Centre, Sanlam Centre in Pinetown and Eikestad Mall in Stellenbosch.