Emira Property Fund is selling a sizeable R1.8-billion portfolio of 25 office assets to a new majority black-owned entity, Shankly Property Investments, which was specifically set up for this purpose.
This concludes the diversified real estate investment trust’s (Reit’s) programme of rebalancing its portfolio out of offices and releases capital for its strategic reinvestment.
The disposal represents a yield of 10.47% for Emira, which will use the proceeds to fund its offshore expansion and to reduce its local debt levels.
Shankly is 51% majority owned by Zungu Investment Company, a 98% black-owned, Level 1 broad-based black economic empowerment entity.
Boyno Trade and Invest, a subsidiary of ONE Property Holdings, Emira’s partner in the lower living standards measure retail property fund Enyuka Property Holdings, holds a 29% stake in the new business.
Emira holds 20% of Shankly.
Shankly will settle R1.48-billion of the acquisition consideration in cash on a property-by-property basis as each one transfers. The final transfers will take place by no later than September 2019.
The payment of the remaining R319.8-million, for which Emira will earn a 1% capital raising fee, will be deferred for five years on condition that Shankly remains at least 51% black-owned.
Shankly’s sizeable seed portfolio is mainly located in Gauteng, as well as in KwaZulu-Natal and the Free State. It includes offices in major nodes including Woodmead, Bryanston, Rivonia, Centurion and Pretoria, with the largest asset being the R232-million Corobay Corner P-grade offices in Menlyn.
“We are pleased to conclude our portfolio rebalancing with an innovative deal that supports transformation and contributes positively to the South African economy.
“Having a 51% black-owned entity as the acquirer in this transaction was always a prerequisite for Emira. It was important to find the right parties, structure and mechanism to transfer the assets in a way that ensures the very best chances of success,” says Emira CEO Geoff Jennett.