SA Corporate declines takeover offers as MD decides to stay on
The property owner has rejected offers from Dipula Income Fund and Emira Property Fund, among others
SA Corporate Real Estate has rebuffed the takeover offers of its suitors saying that they were not in the best interests of shareholders.
Its management will now focus on implementing a new strategy to turn around the company, which has been through a tumultuous time in recent months.
The group has struggled with mounting vacancies and a weak SA economy. It has had to sign negative rental reversions in order to keep certain tenants but its dividends have come under pressure. For its full-year to December 2018 it posted a 6% decline in dividends.
SA Corporate also announced on Monday that MD Rory Mackey had decided to stay on at the landlord after resigning in May.
He said on Monday that the company, which owned assets worth about R17.8bn across various property sectors, had a lot of potential.
“We have a robust portfolio and it is our intention to demonstrate that it will deliver sustainable growing dividends. I am committed to the company and its shareholders,” he said.
SA Corporate has seen its shares tumble over the past two years and a number of projects have not worked out well, including its tie-up with housing developer Calgro M3. Critics have said the company invested in too many property sectors and that some of its local investments have disappointed.
Paul Duncan of Catalyst Fund Managers said SA Corporate has the ability to trade at ratings similar to Investec Property Fund and Vukile Property Fund but only if the board and management restore confidence by appropriate action and performance.
SA Corporate said in June it had received buyout and merger offers from a number of interested parties. Those included Dipula Income Fund, whose offer was worth R9bn, and Emira Property Fund, who wanted to take over the company through a share swap.
“The SA Corporate board has considered the nonbinding expressions of interest and has determined that it is not in the best interests of the company nor its shareholders to pursue the implementation of any of the proposals,” the landlord said on Monday.
The company said that Mackey had agreed to continue in his MD role for one year, “extendable by mutual agreement”.
Antoinette Basson, who quit as financial director in May, rescinded her resignation in July.
In June Jeff Molobela was ousted as chair by the board, with Emily Hendricks assuming the role of interim chair. Molobela died later that month.
SA Corporate’s shares closed 1.16% lower at R3.40.
Dipula withdrew its offer saying that it “will not be pursuing the Proposed Transaction at this stage”.
Garreth Eslton, chief investment officer at Reitway Global, said it was possible that some companies may still make aggressive takeover offers for SA Corporate.
Elston said SA Corporate’s board needed to disclose more to shareholders.
“Shareholders are running out of patience. The board hasn’t given details about why neither offer was suitable. Its disclosure has been the bare minimum. We want to see management bring out a clear strategy now. One would assume that Mackey will lead this strategy now that he is staying on,” said Elston.