Vukile Property Fund, which owns malls in SA and Spain, says it is considering raising R300m by reducing its stake in Fairvest Properties after it merges with Arrowhead Properties at the end of January.
The tie-up between the two property groups was approved by shareholders in 2021 and will create the largest exclusively SA-focused real estate investment trust (Reit) on the JSE. The two are aiming to solidify their footprint in the lower end of the retail market.
Vukile has said it expects to hold about 15% of the newly merged entity, which will have a combined portfolio of about R12bn, while the combined market value of Arrowhead and Fairvest stood at about R6.6bn at Tuesday’s close.
Vukile said on Wednesday that its aim of raising R300m was subject to acceptable pricing.
Vukile had been supportive of the merger, being the second-largest shareholder in Arrowhead with 11.3%, and the largest in Fairvest, with a holding of 14.3%.
The combined group’s investment strategy is to create a portfolio predominately comprising convenience, community and regional shopping centres, as well as stand-alone retail stores that serve lower-income consumers.
Fairvest is a Reit that owns predominantly retail assets in non-metropolitan and rural areas, as well as convenience and community shopping centres serving the lower living standards measure (LSM) market in high-growth nodes. It has a portfolio of 43 properties valued at R3.44bn.
Arrowhead owns a diversified portfolio of retail, office and industrial assets in SA valued at R8.3bn. Its A and B share structure caters to shareholders with different risk appetites.
In morning trade Vukile’s shares were up 0.87% to R11.53, having risen by almost two thirds over the past year. Fairvest was 2.38% lower at R2.05, while Arrowhead’s B shares were up 1.65% to R3.69. Fairvest and Arrowhead’s B shares have risen 16.5% and 53% respectively over the past year.
Update: January 26 2022
This article has been updated with share price information.
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