Picture: ISTOCK
Picture: ISTOCK

Diversified real estate investment trust Redefine Properties has sold its 22.8% stake in Delta Properties to a women-led empowerment consortium in a R1.45bn vendor-funded transaction.

Redefine sold its entire holding in Delta, consisting of 162-million shares at R9 per share. Delta had previously acquired 15 government-tenanted offices from Redefine in 2015 through the issue of shares to Redefine.

Redefine CEO Andrew Konig said the transaction was a "win-win for both companies and drives an urgent need to strengthen women and broad-based ownership in the property sector".

"We have managed to facilitate the sale of an illiquid counter in a single transaction, locking in capital value and preserving income flow.

"Strategically, this transaction achieves far more, as it ties in with our own transformation initiatives to support the development of female leaders in the property sector, while also boosting broader empowerment," he said.

The consortium’s Nooraya Khan said the transaction would result in Delta shares being owned by long-term, strategic investors whose interests were closely aligned.

The majority black women-owned component of the consortium is 51%, while 49% of the shares are owned by Delta’s management and staff, which is also majority black. Phumzile Langeni, a nonexecutive director of Redefine, is among the female participants in the empowerment consortium.

"This deal delivers real transformation trickling down to targeted beneficiaries of the broad-based black economic empowerment policy, with the emphasis being to enhance black women ownership, and include a significant stake for management and staff, which is key with all the changes taking place in the property industry," said Khan.

Delta would gain the higher empowerment rating that is essential to secure long-term government leases.

The vendor loan would be 50% settled after an initial period of five years and the loan can be extended for a further three years if the consortium so decides.

Konig said: "We have previously made it clear we wanted to dispose of our Delta holding due to it being a nonstrategic asset, so this deal makes sense on all fronts, while bringing about significant benefits for all parties.

Delta Property Fund, which focuses on renting offices to the state, wants to grow significantly in 2017 and 2018 as it looks to broaden its investor base.

It plans to raise as much as R5bn through a share issue to the consortium, nearly doubling its market capitalisation, which sits at about R6bn.

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