RMH gets green light to sell offshore assets

Shareholders in property investment company RMB Holdings (RMH) approved the sale of Atterbury Europe despite hearing pointed queries at Tuesday’s general meeting about the reasons for the key real estate asset being sold for at least R500m less than the last audited valuation.

RMH used to be the holding company for FirstRand Bank, but was left with a smattering of strategic property assets after the stake in the banking giant was unbundled to shareholders in mid-2020.

RMH has traded since at a wide discount to the stated net asset value (NAV) of its four property investments, of which Atterbury Europe — which owns property investments in Eastern Europe — is by far the largest. Directors had previously indicated a willingness to release the property assets in a bid to return value to shareholders.

Citing a R512m loss on the sale of Atterbury Europe to buyer Brightbridge, shareholder activist Chris Logan spoke of a “precipitous change” to RMH’s core strategy of monetising the portfolio in an orderly manner and to return maximum value to shareholders.

He said Atterbury Europe comprised 76% of RMH’s property portfolio valuation, and the sale price meant a 13.6% decline in the last stated NAV from 277c a share to around 239c a share.

RMH was approached by Brightbridge in late 2021, but that initial offer was declined. Logan argued that Brightbridge’s second and improved offer of R1.75bn represented a huge loss on the last audited valuation of R2.26bn for the Atterbury Europe stake. He pointed out that the sale price even discounted Atterbury Europe’s audited directors valuation of R1.926bn, which was stated at the height of the Covid-19 pandemic.

Logan asked why the second Brightbridge offer was not rebuffed as well, considering the R512m loss. He added that another offshore-focused property counter, Ironbridge, which until recently was listed on the JSE, turned down three buyout offers before settling on an acceptable deal.

RMH Property CEO Brian Roberts said there are three ways to monetise value at RMH — the sale of 100% of the company’s shares to a third party; a patient monetisation strategy driven by RMH’s partners; or the individual sale of assets.

“If we waited for a patient monetisation event then the IFRS [Independent Financial Reporting Standard] NAV would probably be realised.”

Roberts stressed RMH held a 37.5% stake in Atterbury Europe, and with only negative control could not dictate a monetisation strategy. “There is also limited interest to acquire stakes in unlisted property companies. Declining the offer would mean we are dependent on our co-shareholders for monetising this asset. It costs R30m a year to run RMH ... so we could not really afford to wait.”

Shareholder Albie Cilliers asked how long it would take to dispose of RMH’s remaining assets. These comprise a 27.5% stake in Atterbury Holdings (office, retail and industrial properties), a 10.9% stake in DiverCity Urban Property Fund and various stakes in Integer (which funds and partners property developers).

Roberts reminded him that RMH had indicated a four- to five-year timeline at the end of 2020. “There is no reason for this to change ... there is a three to four horizon to monetise the three remaining assets. That is the long date. If we get an opportunity to do it before, we will do so.”