Sisa Ngebulana, CEO, Rebosis.
Rebosis Property Fund Limited (“Rebosis”) today announced its firm intention to acquire the entire B linked unit capital of Ascension Properties Limited (“Ascension”) that it does not already own.
At the same time, Rebosis will make a comparable offer to acquire the entire A linked unit capital of Ascension that it does not already own.
Rebosis founder and Chief Executive, Sisa Ngebulana commented:
“We are pleased to announce this transaction following our acquisition Ascension’s management company last year. As part of this process we also acquired a 32% stake in the company.
“We believe that the sector has entered a cycle where REITS with smaller market capitalisation and less liquidity in the trade of their shares will increasingly be driven to consolidation and corporate action to best serve the interest of their tenants and investors.
“The acquisition will see a much larger Rebosis with an asset portfolio in excess of R11 billion and a market capitalisation of just under R8 billion.
“Despite the larger size, our assets will still only total 47 properties post the acquisition, which underscores our strategy of investing in high-grade, high-value assets located in strategic nodes, which makes it easier to manage optimally.”
Ascension’s portfolio comprises 28 properties consisting of mostly commercial offices independently valued at R3.7 billion with a total building rental area of 316 568 m2. The majority of these assets are located in the Johannesburg and Cape Town central business districts which further entrenches Rebosis as an empowered landlord of choice in Johannesburg and brings important regional portfolio diversification into the strategic node of Cape Town.
The purchase offer that the Ascension board will propose to its linked unit holders comprises two separate Schemes of Arrangement between Ascension and the holders of Ascension B and A linked units respectively.
In terms of the B scheme (if implemented), holders of Ascension B linked units will receive 23.549 Rebosis ordinary consideration shares for every 100 Ascension B linked units held.
In terms of the A scheme (if implemented), holders of Ascension A linked units will receive 19.34236 Rebosis A ordinary consideration shares for every 100 Ascension A linked units held.
In order to accommodate the Schemes of Arrangement, Rebosis will convert its current linked unit capital structure to an all-share capital structure and will create a new class of Rebosis A ordinary shares.
The economic participation of Rebosis A ordinary shares will effectively be the same as those attached to Ascension A linked units:
– Holders of Rebosis A ordinary shares will receive their distribution before distributions are paid to Rebosis ordinary shareholders.
– For every 5.17 Ascension A linked units, an Ascension A linked unitholder will instead hold 1 Rebosis A ordinary share with entitlement to preferred income distribution. These distributions will be the same amount as the Ascension linked units’ entitlement to fixed income distributions.
Similarly, the rights in relation to voting and liquidation of Rebosis A ordinary shares will also effectively mirror those attaching to Ascension A linked units, except that:
– The voting rights attaching to the Rebosis A ordinary shares will not be more than 25% of the total voting rights of both classes of shares (Rebosis A ordinary shares and Rebosis ordinary shares.)
– No further Rebosis A ordinary consideration shares will be created or issued.
“As a mid-cap fund we offer investors a unique value proposition. Around R3.2 billion of our portfolio consists of high-growth, regionally dominant retail assets, whilst the balance of the fund comprises mainly single tenanted commercial offices with a sovereign underpin.
“Since the acquisition of Ascension’s management company, we have been very hands-on in the management of the Ascension portfolio and are excited about the continued value unlock in this regard.
“Going forward we will continue to act on yield enhancing, strategic consolidation and other pipeline opportunities, building on Rebosis’ strong fundamentals and careful management to grow our distributions and long term capital appreciation for shareholders,” Ngebulana concluded.
The transaction is subject to a number of suspensive conditions, including approval from Rebosis linked unitholders and Ascension A and B linked unitholders respectively.