Redefine International has announced plans to raise more than £36m through a placing of as many as 87m shares.
The dual London and Johannesburg-listed company said the proceeds – representing around 7.5% of the company’s issued share capital – would be used to fund expansion, asset management opportunities and reduce gearing.
Specifically it proposes to buy minority interests within its existing portfolio for around £6m; invest around £10m into redevelopment and asset management opportunities in Germany and fund potential acquisitions in the UK and Germany.
Its gearing strategy involves repaying a £20m working capital debt facility in the short term, saving the company an interest charge of around 6% pa.
Redefine said it believes the current interest rate environment, together with an active and competitive bank lending market, is conducive to extending existing debt facilities at attractive interest rates.
It added that the extension of banking facilities maturing in 2016 provided an opportunity to proactively lock-in interest rates over the next five-to-seven-year interest rate cycle enabling greater certainty on interest costs.
The proposed placing and extension of debt facilities provides an opportunity to incrementally reduce the REIT’s loan to value ratio towards 50% (August 2013 pro-forma: 56.8%).
Redefine has reserved the right in conjunction with Peel Hunt and Investec to increase the number of UK shares from 86.6m up to a maximum of 115m shares, representing approximately 9.9% of the current issued ordinary share capital of the company.
However, if it does so this will not affect the size of the South African placing.
Redefine chief executive Mike Watters said: “Having completed our restructuring programme and become a tax-transparent REIT, we are fully committed to creating and enhancing shareholder value through the selective recycling of capital and executing on accretive asset management opportunities.
“We are particularly positive about the opportunities for growth in our chosen sectors of secondary offices, shopping centres and hotels across the UK and Germany and also see a clear case for the early refinancing of our facilities in this current benign interest rate environment.
“The proceeds from the placing will provide a strong platform to allow us to continue to deliver our sustainable income growth strategy, whilst pursuing our drive to achieve FTSE 250 index inclusion.”
Peel Hunt is acting as bookrunner, financial adviser and joint corporate broker to the company in relation to the UK placing. Java Capital is acting as bookrunner, corporate adviser and JSE sponsor to the company in relation to the South African placing. Investec is acting as joint corporate broker in relation to the UK placing.
bridget.o’connell@estatesgazette.com
