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Shareholders of Transcend Property Fund, which listed on the JSE in 2016, have approved a buyout offer from majority owner Emira Property Fund, and it looks set to delist in mid-November.
During a meeting on Monday almost 92% of shareholders approved the scheme resolutions, which follows an offer of R6.30 per share from Emira, which owns just over 68% of Transcend. This is a just over 1% discount to its volume-weighted average price for the 30 days prior to the announcement, but independent expert Valeo Capital had determined the offer as fair and reasonable, with a midpoint of its valuation range of R6.22.
Transcend had a net asset value per share of R8.23 at the end of its 2023 year, but shareholders will also get a clean-out distribution which won't reduce the scheme-consideration price.
Valued at just over R1 billion on the JSE, Transcend’s portfolio consists of relatively new modern apartments located in secure estates. It had a portfolio of 22 properties valued at about R22 billion at the end of March, more than 82% of which was located in Gauteng by value, with the rest in the Western Cape.
Transcend has said its ability to meet its objectives of access to institutional capital and growth has been hampered by the lack of investment appetite for small, illiquid counters. Smaller companies on the JSE often struggle to retain interest of institutional investors, while the discount to the net asset value at which its shares trade has also made raising capital unattractive for the landlord.
"Under these circumstances, the board of directors of Transcend and Emira believe that Transcend’s continued listing on the JSE is not justified and that the limitations imposed by the regulatory processes and costs associated with a JSE listing outweigh the benefits thereof in the current environment," it has said.
READ | Apartment owner Transcend could delist from the JSE after buyout offer from Emira
According to the circular, implementation of the scheme will result in the delisting of Transcend’s shares on 14 November, but there are still conditions to be met, including approval from takeover regulators.
