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Conclusion of investment agreement with Madison International, disposal of 48.5% interest in European Logistics
REDEFINE PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1999/018591/06)
JSE share code: RDF ISIN: ZAE000190252
Debt company code: BIRDF
(Approved as a REIT by the JSE)
("Redefine")
CONCLUSION OF AN EQUITY INVESTMENT AGREEMENT WITH MADISON INTERNATIONAL HOLDINGS VII LLC AND DISPOSAL OF 48.5%
EQUITY INTEREST IN EUROPEAN LOGISTICS INVESTMENT B.V.
1. INTRODUCTION AND RATIONALE FOR THE TRANSACTION
1.1. Shareholders are advised that Redefine has entered into an agreement with Madison International
Holdings VII LLC ("Madison") in terms of which Madison will acquire a 46.5% equity interest in
Redefine’s Polish logistics property portfolio held through European Logistics Investment B.V
("ELI"), of which Redefine Europe B.V ("Redefine Europe"), a wholly-owned subsidiary of
Redefine currently holds 95%, with the remaining 5% of ELI currently held by associates of Griffin
Real Estate sp. z o.o. ("Griffin"). In terms of the agreement, Madison has agreed to a total equity
commitment of EUR150 000 000. Griffin has agreed to acquire a further 2% interest in ELI from
Redefine Europe and has agreed to a total equity commitment of EUR13 374 000 (the "Transaction").
1.2. ELI is a real estate company which indirectly holds a portfolio of 10 logistics properties, 6 properties
under construction and in addition has acquired 4 properties for future development, located
throughout Poland. The introduction of Madison as an equity investor in ELI is in line with Redefine’s
stated intention to enhance its European logistics property portfolio by the introduction of a leading
international real estate private equity firm and to strengthen its balance sheet by improving its loan-
to-value ratio.
1.3. Following the conclusion of the Transaction, Redefine will continue to hold a 46.5% interest in ELI.
1.4. Andrew Konig, CEO of Redefine says, "The deal fits perfectly with our investment strategy and
provides us with an opportunity to reduce our loan-to-value ratio. It also means we are able to source
additional, well priced capital in order to secure the exclusive priority right to development
opportunities with Panattoni over the next three years."
2. TERMS OF THE DISPOSAL
2.1. Redefine has entered into a share purchase agreement to dispose of (i) 46.5% of its equity interest in
ELI to MIRELF VII S.A.R.L, an associate of Madison ("Buyer 1"); (ii) 1% of its equity interest in
ELI to Linfield Enterprises Limited ("Buyer 2"), an associate of Griffin, and (iii) a further 1% of its
equity interest in ELI to Nebil Senman, an associate of Griffin ("Buyer 3") (collectively, the
"Buyers') for a total aggregate sale consideration of EUR87 265 000, with effect from the completion
date as further detailed below.
2.2. Subject to the fulfilment or wavier (if applicable) of the conditions precedent set out in paragraph 3
hereunder, Redefine Europe will sell:
2.2.1. 46.5% of its interest in ELI, comprising 4 650 shares in ELI, and 46.5% of the existing assets
(including land acquired for future developments at cost), as further detailed in paragraph 4
below, to Buyer 1 on or before the fifteenth business day following the date on which the
conditions precedent to the Transaction have been satisfied or waived (the "completion
date") for an initial share purchase price of EUR51 823 000;
2.2.2. 1% of its interest in ELI, comprising 100 shares in ELI, and 1% of the of the existing assets
(including land acquired for future developments at cost), as further detailed in paragraph 4
below, to Buyer 2 on or before the completion date for an initial share purchase price of
EUR1 114 500; and
2.2.3. 1% of its interest in ELI, comprising 100 shares in ELI, and 1% of the of the existing assets
(including land acquired for future developments at cost), as further detailed in paragraph 4
below, to Buyer 3 on or before the completion date for an initial share purchase price of
EUR1 114 500 (the "Initial Purchase Price").
2.3. Following completion of the assets under construction (as further detailed in paragraph 4 below) the
Buyers agree to pay Redefine Europe an additional consideration in proportion to their shareholding
in ELI provided that the aggregate amount to be paid to Redefine Europe in respect of the assets under
construction, estimated at EUR31 843 000 in respect of Buyer 1 and EUR685 000 in respect of each
of Buyer 2 and Buyer 3 respectively. The estimated consideration is subject to meeting development
and leasing targets.
2.4. The additional consideration payable in respect of each asset under construction upon completion will
be calculated in the relevant shareholding percentage with reference to:
2.4.1. the net operating income generated by the development (assuming 100% leased premises),
divided by 7.1% (being the cap rate agreed to between the parties) after deducting an amount
relating to 50% of the deferred tax liabilities. This amount is limited to EUR2 500 000 in
respect of all the assets under construction, plus;
2.4.2. the working capital and cash amounts available in respect of each development, minus;
2.4.3. any debt amount owed by ELI; minus
2.4.4. any rent reductions agreed to with tenants; minus
2.4.5. any loans granted by the shareholders of ELI for the purposes of financing the developments.
2.5. The Buyers have agreed to commit additional equity funding to expand ELI’s property portfolio over
the next three years. Buyer 1 has agreed to an equity commitment which is estimated at
EUR66 300 000, and Buyer 2 and Buyer 3 have each agreed to an equity commitment estimated at
EUR4 882 500. Redefine has agreed to match the equity commitment of Buyer 1 and will reinvest
EUR66 300 000 of the proceeds received in terms of the Transaction, over the next three years.
2.6. The sale consideration will be settled in cash and the portion of the proceeds of the Transaction
received by Redefine and not reinvested in ELI as set out in paragraph 2.4 above will be used to reduce
Redefine’s local debt facilities.
3. CONDITIONS PRECEDENT
3.1. The disposal remains subject to the satisfaction or waiver of the following conditions precedent by
31 March 2020 ("long stop date"):
3.1.1. obtaining antimonopoly clearance from the Polish Office for Competition and Consumer
Protection in accordance with the Antimonopoly Act of 16 February 2007; and
3.1.2. obtaining the consent of the ELI’s lenders, to the extent applicable.
3.2. If the conditions precedent have not been satisfied or waived (as the case may be) on or before 5:00pm
Central European Time on the long stop date, the share purchase agreement shall automatically
terminate, unless the parties agree prior to such time in writing that the long stop date be extended.
3.3. The share purchase agreement contains undertakings, warranties and indemnities that are normal for
a transaction of this nature.
4. PROPERTY SPECIFIC INFORMATION
Details of the properties, including the name, geographical location, sector, gross lettable area ("GLA"), weighted
average rental per square metre, the net operating profit, the disposal consideration and the valuations, are set out
in the table below:
Existing assets(2)
Value
attributed to
Weighted the property
average Net as at 31
rental operating August
Property Geographical GLA per m2 profit(1) 2019(2)
name location Sector (m2) (R/m2) (R) (R)
1 Lodz Business Lodz, Poland Industrial 63 044 76.31 62 041 375 693 474 000
& Centre II & III
2
3 Krakow II Skawina, Industrial 15 303 65.22 12 879 380 165 588 060
Poland
4 Sosnowiec II Sosnowiec, Industrial 64 796 58.62 43 540 936 698 548 200
Poland
5 Warsaw Sokolow, Industrial 20 766 64.70 13 820 771 240 178 800
Airport I Poland
6 Poznan IV Plewiska, Industrial 32 221 73.81 20 656 142 380 565 000
Poland
7 Krakow III Skawina, Industrial 33 713 68.62 22 940 515 383 947 800
Poland
8 Bydgoszcz II Bydgoszcz, Industrial 45 642 * 34 233 295 478 666 200
Poland
9 Bydgoszcz III Bydgoszcz, Industrial 37 995 * 23 025 436 377 182 200
Poland
* Single tenanted properties weighted average rental rate of R82.70/m2
Assets under construction(2)
1 Bielsko-Biala Bielsko-Biala, Industrial 25 273 28.46 1 021 018 314 600 400
Phase I Poland
2 Bielsko-Biala Bielsko-Biala, Industrial N/A N/A N/A 87 141 621
Phase II Poland
3 Warsaw Phase Warsaw, Industrial 47 148 N/A (564 740) 470 224 689
& I & II Poland
4
5 Lublin Lublin, Industrial 27 701 * 403 748 502 345 800
Phase I Poland
6 Lublin Lublin, Industrial N/A N/A - 50 572 860
Phase II Poland
Land acquired for future developments
1 Opole Opole, Poland Industrial 7 998 N/A (143 141) 73 716 608
2 Gdansk Pruszcz Industrial N/A N/A (211 227) 75 168 361
Gdanski,
Poland
3 Torun B(4) Torun, Poland Industrial N/A N/A N/A -
4 Ruda(4) Ruda, Poland Industrial N/A N/A N/A -
Notes:
1. Extracted from the 31 August 2019 annual financial statements which was prepared in terms of International
Financial Reporting Standards.
2. The properties were valued as at 31 August 2019 by the following professional valuers who are registered
members of the Royal Institution of Chartered Surveyors:
3. The Strykow property has been excluded from the above list as it is in the process of being sold separately to
another buyer. Should the sale of the Strykow property not be successful, the property will be included in the
existing assets, increasing the Initial Purchase Price by EUR7 800 000 and adjusting the equity commitment
accordingly.
4. Land was acquired subsequent to 31 August 2019
Valuer Valuer name (individual Valuer qualifications
expert used)
Savills.pl – Poland Kamil Kowa MRICS, RICS registered valuer
Savills.pl – Poland Karina Szafranska MRICS, RICS registered valuer
Savills.pl – Poland Malgorzata Linska-Bator MRICS, RICS registered valuer
Savills.pl – Poland Tomasz Paszkowski MRICS, RICS registered valuer
BNP Paribas Real Estate – Poland Izabela Mucha MRICS, RICS registered valuer
5. FINANCIAL INFORMATION
5.1. As at 31 August 2019, the net asset value of Redefine’s equity interest in ELI was EUR 121 497 273
or R2 055 004 870 (at exchange rate of EUR1:ZAR16.914, being the spot rate on 31 August 2019).
The proceeds of the disposal of the ELI shares is EUR 62 027 555 or R994 804 130 (at exchange rate
of EUR1: ZAR16.0381, being the spot rate on 20 January 2020).
5.2. The profit after tax attributable to the net assets of ELI for the 12 months ended 31 August 2019 was
EUR 22 271 421 or R361 888 319 (at exchange rate of EUR1:ZAR16.249, being the average rate for
the 12 months ended 31 August 2019).
5.3. Following the disposal, Redefine will retain a 46.5% interest in ELI, which at 31 August 2019 had a
value of EUR 59 469 718 or R953 781 284 (at exchange rate of EUR1:ZAR16.0381, being the spot
rate on 20 January 2020).
5.4. The above financial information has been extracted from the audited results of Redefine for the year
ended 31 August 2019 which were prepared in terms of Redefine’s accounting policies and
International Financial Reporting Standards.
6. In terms of the JSE Listings Requirements, no shareholder approval is required in respect of the
Transaction.
21 January 2020
Sponsor
Java Capital
Date: 21-01-2020 05:25:00
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