Roy Cokayne
Hyprop, the listed retail property fund, has acquired the Somerset Mall for R2.3 billion from Sycom Property Fund in a transaction that clears the way for Hyprop to exit from its investment in Sycom.
The successful conclusion of the acquisition will also result in the withdrawal by Hyprop of legal proceedings in the South Gauteng High Court against Sycom, Sycom Property Fund Managers and the JSE over the disputed general issue of Sycom units for cash.
The purchase consideration for Somerset Mall will be settled by the transfer of 81.5 million Sycom units to Sycom, which equates to 97 percent of Hyprop’s holding in Sycom.
The effective price of each consideration unit was R28.22 each, which was equivalent to the 30-business-day volume-weighted average traded price of Sycom units after the close of trade last Wednesday.
Hyprop will dispose of the remainder of its holding in Sycom within 150 days after the effective date of the transaction of October 1.
Pieter Prinsloo, Hyprop’s chief executive, said the fund was not only pleased to have acquired a high quality regional shopping centre that complemented its existing portfolio, but it also provided the fund with the opportunity to convert an indirect investment into a direct property asset.
“The transaction allows Hyprop a clean and complete exit from the Sycom investment, in line with our stated objective,” he said.
The acquisition is still conditional on regulatory and Sycom unitholder approval plus the conclusion of the purchase by Sycom of the remaining 50 percent stake in Somerset Mall it does not own.
Sycom has indicated that it intends to accept an offer from the AECI Pension Fund to buy the remaining stake for R1.15bn and intends to raise R900 million through a rights offer of about 33 million new Sycom units to qualifying unitholders to provide it with sufficient funding.
Prinsloo said the acquisition was in line with Hyprop’s strategy to invest in sizeable, quality shopping centres and expressed confidence that its experienced management team would be able to extract value from the centre in the future.
He said on conclusion of the acquisition, Somerset Mall would rank as the third-largest asset in Hyprop’s portfolio in terms of value behind Canal Walk and Clearwater Mall.
Somerset Mall is situated alongside the N2 freeway and services Somerset West, Strand, Stellenbosch, Gordon’s Bay and Macassar.
Sycom said its board believed that facilitating the exit of Hyprop from Sycom in an orderly fashion brought a number of benefits to Sycom unitholders, including the removal of potential limitations and restrictions in Sycom’s ability to operate in terms of the board’s stated strategy; an increase in the institutional free float in Sycom; and the removal of ongoing litigation and its attendant costs and distraction of management.
Hyprop shares rose 0.34 percent to close at R73.40 yesterday.