Property groups Redefine Properties and Annuity Properties have agreed that Redefine will acquire the entire issue capital of Annuity, as well as its asset and property management companies, by way of a scheme of arrangement and cash consideration.

According to Redefine’s offer, Annuity linked unitholders would receive 57.7 Redefine linked units for every 100 Annuity linked units, while Redefine would issue 136.6-million linked units, for which it had unitholder approval.

Redefine would also acquire Annuity’s management companies for a cash consideration of R103-million, the companies said in a joint statement on Friday.

The offer represented a premium of around 9% to Annuity’s 30-day clean volume-weighted average price and the transaction was priced at a yield of 8.5%.

Shareholders representing about 79% of the issued share capital of Annuity had provided support for the transaction through irrevocable undertakings and letters of comfort.

“We believe that this transaction will be beneficial to both Redefine and Annuity unitholders,” said Redefine CEO Marc Wainer.

“For Annuity, the transaction maximises the long-term interests of its linked unitholders and protects value in a volatile environment by swapping into a diversified large-cap real-estate investment fund at a premium.”

“For Redefine, the acquisition of Annuity’s R2.1-billion property portfolio has been priced at an attractive yield in an environment of scarce investment opportunities.

“The portfolio is a good match for Redefine, with about 80% of its properties fitting Redefine’s investment criteria, of which 30% are key retail assets. It also includes [high-]quality office and industrial assets with long leases,” he commented.

The transaction was subject to fulfilling various conditions precedent, including approvals by Annuity linked unitholders and the usual regulatory approvals.

Should the transaction go ahead, Annuity linked unitholders would receive a special distribution for the five-month period to February 28.

The acquisition would be effective from March 1 and Annuity linked unitholders would be entitled to the Redefine income distribution for the period starting March 1.

Redefine is the second-largest listed property company on the JSE, by market capitalisation, with a R24-billion property portfolio spanning 3.2-million square metres of space across 251 properties.

It is also invested in a R6-billion portfolio of listed property securities, which includes investments in Fountainhead Property Trust.