South African-focused real estate investment trust (Reit), Dipula Income Fund, on Friday announced its plans to partner with Resilient Reit Limited (Resilient) in a R1 billion transaction that will see Dipula optimise its capital structure and benefit from the retail property and deal-making experience of Resilient.
Read more on Moneyweb articles on Dipula here.
Izak Petersen, CEO of Dipula said: “The transaction provides an elegant solution to simplifying our capital structure that has frustrated the growth and fair value rating of Dipula for several years.
“In addition, the transaction further bolsters our retail portfolio of township, rural and convenience shopping centres, and we expect to continue working closely with the Resilient team in unlocking value for our shareholders.”
According to the group’s statement, Dipula currently has a dual share structure with A and B shares. A shares have a preferential entitlement to any distributions which grow annually at the lower of either CPI or 5%, while B shareholders receive the balance of the net distributable income, resulting in the B shares continuously trading at a deep discount to net asset value.
The proposed investment by Resilient envisages that Dipula will offer to repurchase all the issued Dipula A shares from shareholders, through a combination of cash or by way of a share swop for Dipula B shares.
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“In terms of the proposal, Dipula will offer A shareholders R6.61 per share, subject to the pro rata adjustment of the election so that the overall aggregate cash payable is equal to approximately R600 million. A shareholders will receive two Dipula B shares per A share for the remainder of their A shares,” it said in a statement.
Resilient’s proposed investment also includes Dipula’s co-ownership of Circus Triangle Mall, a 34 489m² retail centre situated in Mthatha central, anchored by Shoprite, Game and Woolworths.
Dipula said that upon implementation of the proposal, Resilient will hold a significant investment in its company and it will also have the right to appoint one representative to the board of directors.
Des de Beer, CEO of Resilient commented: “Dipula has a solid management team with great prospects that we want to get behind and support to help drive the creation of value for shareholders.
“We envisage the co-ownership of suitable retail assets with Dipula, and we’ll continue to support the company to play a leading role in the listed property sector, once their capital structure has been simplified.”
Dipula says it will issue further market updates once it has resolved to proceed with the proposal, and once the agreements have been concluded.
Palesa Mofokeng is a Moneyweb intern.