Redefine restructures funding arrangements for Mall of the South on Covid-19

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Various amendments were made to the put option arrangements (iStock)
Various amendments were made to the put option arrangements (iStock)
  • Redefine Properties has reached an alternative arrangement relating to the conclusion of the sale of the Mall of the South.
  • The regional shopping centre is located in Aspen Hills, south of Johannesburg.
  • The deal will be funded through a loan agreement with RMB.


JSE-listed diversified real estate investment trust Redefine Properties has reached what it regards as a mutually beneficial and alternative arrangement relating to the conclusion of the sale of the Mall of the South.

As part of the agreement, this regional shopping centre in Aspen Hills, south of Johannesburg, will be acquired by a limited liability special purpose vehicle (SPV) for R1.76 billion in cash. RMB Investments and Advisory Proprietary Limited will hold an 80% equity interest in the SPV and Redefine 20%.

The deal will be funded through a loan agreement with RMB.

The transaction is expected to close before 1 November 2020 once all conditions are met, including approval by the Competition Commission. The transaction constitutes a category 2 transaction in terms of the JSE Listings Requirements and is not subject to approval by Redefine shareholders.

Construction of the mall began during 2013, and at that time the property was considered to be an attractive asset to complement Redefine's retail property portfolio. In order to secure participation in the development, Redefine entered into a structured financing transaction with Zenprop and RMB, which would allow or require Redefine to purchase the mall upon the occurrence of certain events.

The coronavirus pandemic has, however, dealt a blow to retail tenants and landlords already struggling with declining disposable incomes and a sluggish economy, Redefine points out in a statement.

"Given that circumstances had changed dramatically, clearly unforeseen at the time of entering the put agreements, all the parties agreed to engage constructively to restructure the put arrangements," says Andrew Konig, CEO of Redefine Properties.

"The restructure allows additional time for Mall of the South to recalibrate to the post Covid-19 retail real estate environment and provides Redefine with the opportunity to either acquire or dispose of the mall over a three-year period. We do not anticipate the restructured arrangement to have a significant adverse impact on our loan-to-value ratio."

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