JSE-listed Redefine Properties and fellow JSE-listed Pivotal Fund have signed an implementation agreement to enable Redefine to acquire all of Pivotal’s issued shares.
When concluded, Pivotal shareholders will hold 138.54 Redefine shares and 9.38 shares in property development company Echo Polska Properties, which is 49% owned by Pivotal, for every 100 Pivotal shares held prior to the implementation of the transaction.
Pivotal faces a number of external challenges with a stagnant domestic economy, an uncertain political landscape and a rising interest rate environment.
While Pivotal’s completed portfolio is expected to continue to perform satisfactorily, development activity is expected to remain constrained, affecting development returns in the short-to-medium term.
“As a development focused property fund, we consistently achieved a compounded yearly rate of return of 27.8% from February 2012 to February 2016. Within a stagnant domestic economy and rising interest rate environment, we experienced significant pressure on our ability to generate satisfactory development profits and investment returns for our shareholders going forward,” Pivotal CEO Jackie van Niekerk said in a joint statement issued on Tuesday.
Redefine added that the transaction was in line with its strategy to diversify, grow and improve the quality of its portfolio.