Redefine Properties Ltd recently agreed to acquire The Pivotal Fund for R6.1bn ($425m), however the fund, which is also South Africa’s second-largest REIT, is planning to dispose of Pivotal’s African assets in countries like Nigeria where they own 37.1% of an office development called The Wings.
In a statement released by Redefine Properties, they explained that:
Pivotal’s African assets in markets like Mauritius, Mozambique, Nigeria, Morocco, Kenya and Zambia will be sold post implementation.
Redefine Properties acquired Pivotal as part of their strategic intent to become the landlord of choice in Grade A office space in sought after areas in South Africa. The REIT also shifted its strategy in recent years to become a more urban focused landlord by acquiring modern properties in better performing nodes.
Once Redefine’s acquisition of Pivotal has been implemented, it is believed that they will begin the disposal of Pivotal’s African assets. The acquisition is subject to the usual regulatory processes for a transaction of this nature and will be implemented through a scheme of arrangement that requires 75% approval at a general meeting of Pivotal shareholders.
Pivotal’s Exposure to Africa
While Pivotal’s portfolio enables Redefine recycle its capital by disposing unaligned assets with new attractive income producing ones, Pivotal also had exposure to African real estate markets through an investment into Nigeria and another into a pan African income property fund.
Last year, Pivotal entered into an MoU to acquire a 37.1% shareholding in The Wing Towers in Victoria Island, Lagos, which is 50% anchored by Oando, an indigenous energy company. Pivotal joined Oando and RMB Westport as the new joint venture partner for the 27,000sqm project.
Pivotal’s exposure to other African countries comes through their ±12.5% acquisition of Mara Delta Property Holdings Limited via their wholly-owned subsidiary Pivotal Global Proprietary Limited. Mara Delta is a pan African property income fund focusing on African real estate assets (ex. South Africa) with a well diversified portfolio consisting of retail (27%), office (60%), corporate accommodation (10%) and light industrial (3%) located in Mozambique, Morocco, Kenya, Zambia and Mauritius.
Who will buy them?
There is no indication on how Redefine intend on selling Pivotal’s investments in African countries. It is possible that they attempt to sell 37.1% of the Wings back to their joint venture partner’s Oando and RMB Westport and also take a similar approach with their stake in Mara Delta.