Johannesburg, South Africa, 26 June 2020 – Redefine Properties (JSE: RDF) announced today that its competitive bidding process to sell its interest in Journal’s two student properties in Australia has been concluded at AUS459 million. The disposal of its interests, comprising 1,391 beds is part of Redefine’s portfolio refinement and loan-to-value improvement strategy.
During 2017, Redefine had acquired a 90% beneficial interest in Journal Student Accommodation Fund and during the following year Journal Swanston Sub Trust to develop the properties in Melbourne, Australia as purpose-built student accommodation and associated retail. Development of Leicester Street, an 804-bed facility, was completed in 2018 while the development of the 587 bed Swanston Street was completed in May 2020.
Redefine financial director Leon Kok says, a portion of the proceeds from the disposal will be used to settle the Australian loan facilities on the properties amounting to around AUS132 million and the remaining proceeds will be utilised to reduce Redefine’s other interest-bearing borrowings and enhance its liquidity.
This transaction forms an integral part of Redefine’s loan-to-value improvement plan, which includes the disposal of approximately R8 billion of non-core assets across Redefine’s property asset platform, explains Kok.
The transaction will also secure the release of 60 million Cromwell Property Group shares from an encumbrance with Redefine’s intention that such Cromwell shares be sold on the open market to further advance Redefine’s stated intention to strengthen its balance sheet and bolster liquidity.
Redefine’s chief executive officer Andrew Konig says the transformation of the property asset platform is necessary to withstand the impact of the pandemic whose trajectory is still evolving. Recycling out of non-core assets at the top end of their capital value will enable us to strengthen our balance sheet and crystallise the benefits of net proceeds.
We have consistently said our plan is to recycle capital into core markets where there is scope for scale, by disposing assets that no longer fit our long-term value creation strategy.