Redefine returns to paying dividends and makes a surprise offer for EPP

Share price surges over 10% on the news.
Image: Moneyweb

JSE-listed diversified real estate investment trust (Reit) Redefine Properties officially returned to paying out a full year dividend on Monday, but also announced a surprise move to acquire full control of Polish-based property counter EPP and delist the company.

Publishing its full-year results for the year ended August 31, 2021, the group declared a dividend of 60.12 cents a share at a 100% payout, unlike many of its Reit peers that have opted for a lower payout ratio as the Covid-19 pandemic continues to affect the commercial property sector.

This comes after Redefine took the tough decision not to pay out any dividends for its 2020 financial year, after the initial harsher Covid-19 financial fallout in 2020.

Read:

R9.8bn write-down in Redefine’s property portfolio

Vukile, Redefine defer dividend payouts due to Covid-19 hit

“Distributable income per share for the year ended August 31, 2021 amounted to 52.96 [FY20: 51.50] cents, an increase of 2.8% on the previous year,” Redefine noted in its latest results Sens statement.

“Taxable income includes unrealised foreign exchange gains of R350.4 million due to the appreciation of the rand and is non-recurring. The board has declared a dividend of 60.12 [FY20: 0.00] cents per share which will reduce the taxable income of the company by the amount of the dividend,” the group further pointed out.

But perhaps the bigger announcement on the day was Redefine also issuing a cautionary with its results, relating to a share swap offer to acquire the rest of EPP. Redefine is already a major shareholder in EPP.

The group did not mention any specific values of the proposed EPP deal.

“Redefine has submitted a non-binding proposal to the EPP board which, if approved by both the EPP board and, to the extent necessary, by EPP and Redefine shareholders, will constitute EPP as an unlisted subsidiary of Redefine,” the Reit noted in the Sens.

“In terms of the proposal, and conditional on EPP shareholders approving of a delisting of EPP shares on both the JSE and LuxSE, Redefine will make an offer to EPP shareholders that will afford EPP shareholders an ability to swap their EPP shares for Redefine shares at an independently verified fair swap ratio,” it said.

“The proposed transaction would be conditional on, inter alia, EPP implementing certain restructuring transactions [including the disposal of non-prime property portfolios to joint venture companies to be owned by EPP and third party investors] that will significantly bolster EPP’s balance sheet, generate much needed liquidity and materially reduce EPP’s LTV [loan-to-value ratio or gearing level],” Redefine added.

Shares in Redefine surged over 10% in early morning trade on Monday following the news. At around 10am the stock was trading at R5.28. EPP’s share price was up over 6% on the JSE, trading around R12.65.

Redefine and EPP share prices

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