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Merger to create BEE property giant

Feb 01 2011 13:52
I-Net Bridge
Johannesburg - Two of South Africa's prominent commercial property companies are set to merge and establish a sizeable, diverse commercial property fund with black economic empowerment (BEE) credentials.

The planned merger of Dipula Property Fund and Mergence Africa Property Fund will create a R1.4bn property portfolio spanning a lettable area of about 320 000 square metres and serving more than 500 tenants throughout SA.

SA's first full-service black-owned property services company, Dijalo Property Services, holds the majority stake of Dipula Property Fund.

Mergence Africa Holdings, an independent black-owned and black-managed financial services company, owns the controlling interest in Mergence Africa Property Fund.

JSE-listed property company Redefine Properties International Limited [JSE:RIN] owns a stake in both funds.

Saul Gumede, the co-founder of Dijalo Property Services, and Izak Petersen of Mergence Africa Properties, will take up executive positions in the merged entity.

"The larger combined fund provides greater critical mass, which improves competitiveness, economies of scale and attractiveness to asset management talent. Importantly, it greatly enhances the ability to generate sustainable and growing rental income streams," said Petersen.

"The intention is to grow the fund through a highly acquisitive strategy and to take best advantage of our unique market position," he said.

Petersen said the new company is already working on a number of acquisitions.

"Growing our assets underpins our immediate objective of listing the merged fund on the JSE," he Petersen.

Gumede said the merger will result in increased portfolio diversification - and thus reduce risk - with the combined geographic spread spanning all nine provinces in SA.

"The merger also enhances the sectoral spread of the portfolio, which will comprise retail (50%), office (25%) and industrial properties (25%), with a substantial blue-chip tenant base," said Gumede.

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