A new black controlled property investment entity, Shankly Property Investments, is emerging with an asset base of about R1.8 billion with Zungu Investment Company (Zico) as a controlling shareholder. This is courtesy of a property portfolio re-balancing sale conducted by JSE listed group, Emira Property Fund.
Seen within the broader scheme of things, the deal points to rising appetite for another wave of BEE deals in the mainstream corporate sector.
Emira announced today that it is selling a R1.8bn portfolio of 25 office assets to a new majority black-owned entity, specially setup for this purpose. The portfolio is mainly located in Gauteng, as well as in KwaZulu-Natal and the Free State. It includes offices in major nodes including Woodmead, Bryanston, Rivonia, Centurion, and Pretoria, with the largest asset being the R232m Corobay Corner P-grade offices in Menlyn.
The acquirer, Shankly Property Investments, is described as a black-owned business with 51% stake held by Zico, an established BEE equity players lead by prominent businessman Sandile Zungu. Shankly will also feature Boyno Trade and Invest as a 29% shareholder. Boyno is a subsidiary of ONE Property Holdings, Emira’s partner in the lower LSM retail property fund Enyuka Property Holdings. Emira also retains 20% stake in Shankly.
Shankly will settle R1.48bn of the acquisition consideration in cash on a property-by-property basis as each one transfers. The final transfers will take place by no later than September 2019. And the payment of the remaining R319.8m, for which Emira will earn a 1% capital raising fee, will be deferred for five years on condition that Shankly remains at least 51% black-owned. Interest on this remaining payment will accrue at Jibar plus a minimum margin of 350bp and is payable quarterly.
Emira CEO, Geoff Jennett, said “We are pleased to conclude our portfolio rebalancing with an innovative deal that supports transformation and contributes positively to the South African economy.”
He added that “Having a 51% black-owned entity as the acquirer in this transaction was always a prerequisite for Emira. It was important to find the right parties, structure, and mechanism to transfer the assets in a way that ensures the very best chances of success. The Shankly transaction is a natural fit that builds on relationships with Emira’s partners. We are all vested in its success.”