Listed property fund Emira has agreed to sell 25 of its office assets for R1.8 billion to a new majority black-owned entity.
In a separate transaction, Emira has acquired a 9.9 percent interest in JSE AltX-listed Transcend Property Fund for R45.9 million.
These transactions follow Emira chief executive Geoff Jennett confirming last month that the fund planned to continue reducing its exposure to the South African office sector to prioritise further investment on its offshore and residential portfolio.
Emira said yesterday that the sale of 25 office assets to black-owned Shankly Property Investments was the largest transaction it had done to date and concluded its programme of rebalancing its portfolio out of offices while releasing capital for its strategic reinvestment.
Shankly will be 51 percent majority-owned by Zungu Investment Company, which is a 98 percent black-owned entity.
Boyno Trade and Invest, a subsidiary of One Property Holdings, Emira’s partner in the lower living standards measure retail property fund Enyuka Property Holdings, would take a 29 percent stake in the new business, with Emira holding the remaining 20 percent.
Shankly would settle R1.48 billion of the acquisition consideration in cash on a property-by-property basis as each asset is transferred, with the final transfers taking place by no later than September next year.
The payment of the remaining R319.8m, for which Emira would earn a 1 percent capital raising fee, would be deferred for five years on condition that Shankly remained at least 51 percent black-owned.
Jennett said they were pleased to conclude their portfolio rebalancing with an innovative deal that supported transformation and contributed positively to the South African economy.
“The Shankly transaction is a natural fit that builds on relationships with Emira’s partners. We are all vested in its success,” he said.
The transaction was still subject to a number of approvals, including by the competition authorities.
Emira said that the proceeds from the disposal would be used to fund its offshore expansion and reduce its local debt levels.
Emira announced last year that it had embarked on an investment strategy into the US together with its partners, the Rainier Group of Companies.
This resulted in Emira acquiring four grocery-anchored convenience retail centres in the US with a combined value of $32.2m (R477.7m) through its US subsidiary together with the Rainier Group.
Emira is also internationally diversified through its investment in Australian Stock Exchange-listed Growthpoint Properties Australia, valued at R956m.