Emira CEO Geoff Jennett
JSE-listed real estate investment trust (Reit) Emira Property Fund has finalised the acquisition and subsequent delisting of fellow Reit Transcend.
The properties of Transcend's portfolio of 4 000 tenants will continue to be managed by International Housing Solutions (IHS), while also benefitting from greater alignment with Emira’s systems and a bigger bank of industry knowledge, which includes a wealth of experience across property sectors as well as solar photovoltaic plants, biodiversity and community projects.
Emira initially acquired a 34.9% stake in Transcend in 2018 to diversify its investments to include the valuable suburban multifamily residential rental property segment.
Since this initial investment, shifts in the market have seen the appetite for small-cap stocks dry up and, being very illiquid, there is no longer value in Transcend remaining listed. Emira responded by increasing its ownership in Transcend with a view to bringing it in-house, increasing its holding in Transcend to 68%, and eventually 100% in late 2023.
Transcend has subsequently been delisted from the JSE.
“Our journey with Transcend is a success story for Emira. We partnered with the right asset management team to advance our diversification and earn good returns,” said Emira CEO Geoff Jennett.
“We are pleased to have successfully converted a good indirect equity investment into a wholly owned subsidiary, adding another powerful lever to Emira’s overall diversified strategy. Residential property now represents about 16% of our South African portfolio, although this is likely to change in line with market opportunities,” he said.
The transaction continues Emira’s track record of advancing its strategies incrementally, starting by taking an initial position in opportune investments to establish a springboard from which to assess, create and grow value for shareholders over time.
“Emira’s investment approach has played out advantageously in its take-up and subsequent sale of a stake in Growthpoint Properties Australia and its co-founding and accretive sale of its stake in specialist retail fund Enyuka.
“This tactic is also driving Emira’s incremental investment into the US where its asset-by-asset capital allocation approach with in-country specialist co-investment partner The Rainier Companies has secured a meaningful 19% of Emira’s asset base offshore in equity investments of R2.8-billion comprising 12 grocery-anchored open-air convenience shopping centres,” he said.
“At Emira, we actively manage our capital allocation, and constantly assess assets for their optimal use and act accordingly. There is nothing passive about our approach to our assets even though it does take time,” Jennett said.
Emira has a diversified portfolio that is balanced with a mix of assets across sectors and geographies. In South Africa, Emira’s 91-property strong portfolio includes commercial, retail, office and industrial, as well as residential assets valued at R12.1-billion.