The asset swap will mean that Pareto will acquire the 50% share of Menlyn Shopping Centre it does not already own from Old Mutual and Old Mutual will acquire the 50% share of Cavendish it does not own from Pareto, with the net consideration payable in cash.
Old Mutual and Pareto have equally owned the two landmark shopping centres for five years and there have been developments in both centres, with Menlyn in particular currently undergoing a development upgrade. Together, these assets represent around R10 billion in prime retail property investment.
Peter Levett, MD of Old Mutual Property, which manages the properties, said the asset swap was mutually beneficial for both companies and that the decision was based on ensuring optimal growth in their respective property portfolios.
"We are very pleased with this value enhancing, which gives us outright ownership of a key retail centre, Cavendish, and enables us to access additional development opportunities within our portfolio. Our ability to reinvest the net cash proceeds in new developments will further enhance value in our strong portfolio of retail, office and industrial assets which total a combined R20 billion," says Levett.
Marius Muller, CEO of Pareto, comments, "We are thrilled that this transaction will see Pareto becoming the outright owner of another regional shopping centre. Menlyn Park Shopping Centre is an unrivalled retail property that is an ideal fit for the portfolio, especially as its current R2 billion redevelopment project reflects the company's strategy of adding value to our assets.
"2014 has marked significant strategic growth of Pareto's portfolio of strongly-trading malls, with Pareto securing sole ownership earlier this year of other landmark retail property assets across Gauteng and the Free State," concludes Muller.
The transaction is subject to Competition Authority approval and other conditions associated with a transaction of this nature.
