Fountainhead Property Trust has agreed to sell to Redefine Properties all of its assets, including the Fountainhead property portfolio, in exchange for 82 Redefine shares for every 100 Fountainhead units held.
As part of the transaction Redefine will assume all of Fountainhead’s liabilities, including its interest-bearing debt. The transaction will be effective from 1 September 2014.
Details of the transaction were announced today in a joint statement by Redefine and Fountainhead, which is managed by Fountainhead Property Trust Managers Limited (FPTML). Redefine’s board and the independent board committee of FPTML have agreed that a merger of Redefine and Fountainhead makes strategic sense.
Marc Wainer, CEO of Redefine comments, “We welcome this agreement and are pleased to be taking this transaction forward.”
Redefine is the largest unitholder in Fountainhead, at 65,9%. It is also the owner of FPTML, the asset manager which controls the assets of Fountainhead.
The transaction is subject to the fulfilment of the usual conditions precedent including approvals from Fountainhead unitholders, the Financial Services Board and Redefine shareholders.
FPTML’s independent committee has endorsed the transaction and has recommended that Fountainhead unitholders, excluding Redefine which is a related party, do the same.
For Fountainhead investors, the transaction will provide exposure to a diverse portfolio of property assets valued at R44.5 billion with a focussed portfolio strategy, access to lower costs of capital and the benefits of economies of scale and cost savings thanks to synergies between both property portfolios. It will also unlock greater ease of trade through the more liquid Redefine shares.
For Redefine shareholders, the transaction means strategic portfolio growth and diversificationthrough the added benefit of increased exposure to retail property. The Fountainhead property portfolio valued at over R12 billion comprises 66 properties covering 935,355 sqm of lettable space and is concentrated in retail properties, which represent just over 70% of the property portfolio by value.
Once the transaction is finalised, Fountainhead will be delisted from the JSE. Fountainhead’s unitholders will receive the final distribution for the six-months ending 31 August 2014. Their first distribution as Redefine shareholders will be for the six months ending 28 February 2015.
“For Redefine, this is another important milestone in expanding the local property portfolio and in aligning the interests of investors,” adds Wainer.