Ascension, Delta, Rebosis to explore tripartite merger
Real estate investment trusts (REITs) Ascension Properties, Delta Property Fund and Rebosis Property Fund have concluded a written cooperation agreement to explore a potential tripartite merger, Delta announced on Tuesday.
The companies were considering a merger as capital available to smaller market capitalisation REITs was increasingly constrained, driving consolidation and corporate activity to best serve the interests of the REITs’ linked unitholders and tenants.
If merged, the values of the entity’s property portfolio and market capitalisation were expected to be in excess of R16.5-billion and R9.5-billion respectively, which would make it the largest listed black economic-empowerment property fund on the JSE.
The merger was also expected to fast-track the growth aspirations of each of the parties, and the merged entity was expected to attract interest from a wider group of investors, thereby increasing the liquidity of the merged entity which could accordingly result in a rerating.
Meanwhile, the merger was also expected to position the entity to make further yield-enhancing acquisitions with its increased size expected to provide it with greater access to debt and capital markets at competitive rates.
The merged entity was also expected to have a lower cost base, which would improve its prospects.
Delta said the swap ratio and legal structure of the proposed merger would be determined and agreed upon once each of the parties had concluded a satisfactory due diligence investigation on each of the other parties, and once an independent valuation of each of the parties’ property portfolios had been completed.
A proposed board for the merged entity was also in the process of being finalised, Delta noted.
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