Following investment in leading South African property group, Atterbury, RMH makes a 34% investment in urban renewal property company, Propertuity.
Investment holding company RMH announced the second transaction in the execution of its property investment business that is set to expand alongside its current, single 34% investment in FirstRand Limited. As a further step in the strategy of establishing a diversified portfolio of scalable entrepreneur-led businesses with proven track records in managing and building out property portfolios, RMH announced its intention to make a 34% investment in leading South African urban renewal group, Propertuity Development Company (Propertuity).
Propertuity represents the first investment into RMH’s specialist portfolio that will focus on niche areas of the property sector. As communicated previously, the specialist portfolio sits alongside RMH’s core property portfolio that will target the more traditional and larger areas of South African property. Atterbury is RMH’s key development partner in the core portfolio.
The specialist portfolio will house best-of-breed specialist developers and managers focused on key niches in the property market. This portfolio is aimed at achieving higher yields and faster net asset value growth than the more traditional core portfolio.
As communicated previously, the overall RMH property strategy will focus on owner-managed businesses across a broader value chain in property. It will primarily target unlisted opportunities and will balance net asset value growth and yield. RMH will continue to follow a phased approach in acquiring its various property investments over the coming years.
RMH’s CEO Herman Bosman said:
“We are very excited to announce our second transaction to further diversify RMH’s earnings base through investing into the breadth of the property value chain. Propertuity has expanded from starting in 2009 with one building valued at R15 million to having a portfolio worth over R1 billion today. The company has an extremely entrepreneurial and talented management team that remains invested in the business. As a leader in urban renewal it offers access to a highly specialised niche within the property market and a long-term growth opportunity, both locally and abroad. We will work with Propertuity to assist them with capital, strategic input, networking opportunities, structural longevity and additional governance systems.”
Propertuity’s CEO Jonathan Liebmann added:
“We are very pleased that RMH will become a significant shareholder in Propertuity. Their investment will create the foundation for our next phase of growth, which will see us further developing Johannesburg and Durban cities, as well as looking for opportunities in new cities. The founders of RMH have long been an inspiration to me as an entrepreneur in how they built a disruptive innovation-led business within an established industry. Together with our existing partners from Buffet Investments, I believe we have access to some of the most exceptional business minds in the country on our continued mission to transform the built environment.”
Shareholding in Propertuity post the transaction will consist of management (46%), RMH (34%) and Buffet Investments (20%). Buffet is an established property investor which has had significant success in backing entrepreneurial property investments. Since its creation seven years ago, Propertuity has focused on the redevelopment of dilapidated industrial and office areas in Johannesburg and Durban. The group currently has around 50 properties in Johannesburg and 20 in Durban, with early entrance into the Pretoria CBD underway.
The financial effects of this transaction will be immaterial on the financial results of RMH over the short to medium term. RMH intends to fund its investment into Propertuity through preference share funding.
The successful conclusion of the investment into Propertuity is subject to regulatory and commercial approvals.