Fairvest Property Holdings today said it has abandoned its friendly merger with shopping mall owner Safari Investments (JSE: SAR), while Cape Town-based Comprop ups the stakes with its R1.8bn offer.
The announcement comes after unlisted property group, Community Property (Comprop) launched an R1.8-billion buy-out a bid to acquire the entire issued share capital of Safari last month.
Comprop, which is part of the Futuregrowth Asset Management stable, and has a R4.4 billion portfolio targeting rural and township retail, says the offer has majority support from Safari’s main shareholders.
Fairvest CEO, Darren Wilder said: “We undertook a thorough due diligence of the Safari operations and are convinced that a merger would have created a specialised, lower LSM retail only focused fund with R6 billion worth of assets, a proposition which is in line with fund managers’ strategies for property funds to consolidate, specialise and create liquidity. We expected that, provided we delivered performance, the merged entity would have been rerated with additional support from its inclusion in the SA REIT and ALPI indices, ultimately driving long-term value.”
“We are known in the marketplace to be disciplined buyers with a well-defined valuation framework that sets key financial hurdles for transactions. We believe that increasing our bid to match an offer that equates to a less than 8% equity yield for the Safari assets would not have been beneficial to Fairvest shareholders. Our deal-making team is experienced and resilient and deals with potential transactions on a continuous basis. It is critical that we maintain our discipline to only pursue transactions that ensure value creation for our shareholders over the long term.
Wilder said that Fairvest has differentiated itself through performance rather than size, however he said that these were attractive retail assets that service the lower LSM market and long term would be a loss for the listed investment landscape.
Fairvest will continue to pursue acquisitions at the right price and will not drift from its communicated investment strategy.
The company will announce its annual results on 5 September 2019 and has indicated in its interim results that it expects full-year results to be in line with market guidance.
Source: SA Commercial Property News http://www.sacommercialpropnews.co.za/property-companies-news/9085-fairvest-withdraws-merger-offer-for-safari-investments.html