Accelerate Property Fund has agreed to dispose of the Leaping Frog Shopping Centre in Fourways. The value as at 30 September 2021 was R140.3 million and the agreed price is R130 million, so that's not ideal. The yield on the selling price is 8.8%. Accelerate will use the proceeds to reduce debt and has the option to repurchase 50% of the property once its redevelopment by the new owner is complete. This goes some way towards explaining the discounted price.
Balwin will hopefully avoid the "head office curse" that investors like to joke about in the market - a superstition that buying a new head office brings trouble. Balwin is buying a nearly 3,000sqm 6-star green rated office near Melrose Arch for R125.8 million, so investing 7.5% of the market cap in a head office building isn't a good start. Balwin is already in the building under a he ad lease and started negotiating with the owners after renovations commenced to the property. The company has plans for further improvements and will initially occupy 2,500sqm, with the balance available for lease by third parties. Balwin notes that suppliers and professionals have expressed interest in taking the remaining space. Here's the worst part: the entire purchase price is being funded by a loan. I asked around on Twitter and the response to this deal was incredibly negative.
The scheme of arrangement to restructure the shareholding structure of Dipula Income Fund has been approved by shareholders. Dipula will now repurchase all "A" shares and issue 2.4 "B" shares in exchange for every "A" share. This means that the only shares in issue going forward will be the "B" shares.
In December, BDO opined that the Afristrat ordinary shares were worthless. Management put forward a value of R10 million but that doesn't help when there are so many shares in issue that even a R0.01 share price puts the market cap far above this value. To help address that issue, the company is busy with a 120 to 1 share consolidation. The bigger news is a deal by subsidiary ECS Private Equity to acquire 100% of Crosscorn and a distressed asset pool for a purchase price of USD 5 million. Crosscorn is a seed business in Botswana. The distressed assets are loans various companies to jurisdictions ranging from Greece to Tunisia. Afristrat will pay for these assets through the issuance of domestic medium-term notes (USD 3.5 million) and ordinary shares (USD 1.5 million). In an attempt to find a silver lining for this company, all I can say is that at least it isn't boring.
An update to the Basil Read business rescue plan has been released. There are three remaining contracts in the defects liability period, with end dates in the next few months. The aggregate contingent liability for const ruction guarantees has been reduced to R72.8 million from R1.1 billion at the beginning of the rescue proceedings. No progress has been made on selling non-core assets and the company cannot release financial results for the six months to December 2021.
If you are a Textainer Group shareholder, you should note that there has been a change in the treatment of dividends. They will now be classified as taxable income rather than non-taxable returns of capital. Brokers will need to get this right from a tax perspective, but it may be worth speaking to your broker if you have a chunky position in the company.
To finish off the week, the DealMakers team gives us their overview of corporate activity.
Have a great weekend, especially if you are a golf fan!
The Finance Ghost
