Johannesburg-listed CEE property investors New European Property Investments (NEPI) and Rockcastle have agreed a merger than creates a new powerhouse in the region with over €3 bn of assets under management.
Isle of Man-based NEPI is also currently listed on the Bucharest Stock Exchange (BVB) and Rockcastle on the Stock Exchange of Mauritius (SEM), where it is fully incorporated. The deal follows the recent trend of South African capital seeking exposure to central European property markets.
While NEPI is a commercial property investor and developer that owns, develops and manages dominant retail assets and A-grade offices in CEE, including the largest retail portfolio in Romania, Rockcastle owns, develops and manages retail assets in the CEE region and invests in global real estate listed securities, including companies such as Hammerson, Simon Property, Unibail and Prologis. The current market capitalisation of NEPI is €3.4 bn, while Rockcastle's is €2.2 bn.
In a note to shareholders, the two companies said NEPI's investors would 'gain immediate exposure to a significant portfolio in Poland, the most liquid and largest real estate market in the CEE region, with a positive economic outlook. Rockcastle shareholders will gain exposure to the largest retail real estate portfolio in Romania (which is the second real estate market in CEE by size and the fastest growing economy in Europe in 2016 and 2017, according to IMF forecasts), and the second largest retail real estate portfolio in Slovakia'.
It said that the merged business was expected to become the largest CEE retail real estate company, and one of the top retail real estate companies in Europe.
The transaction, which still has to be approved by the relevant competition authorities, will see the two businesses merged into an entity newly incorporated in the Isle of Man, NEPI Rockcastle, with an effective share swap ratio of 4.5 existing Rockcastle shares for every 1 existing NEPI share.
While NEPI was one of the first South African-listed firms to invest in CEE, both companies have figured highly in the recent flood of capital into central Europe. Since the start of October alone, NEPI has acquired Arena Centar in Zagreb, Croatia, together with 4.4 ha of adjacent land, and Aupark Shopping Centre in Piestany, Slovakia. In addition, Shopping City Piatra Neamt opened on 1 December 2016. The value of NEPI's investment property portfolio as at 30 November 2016 was approximately €2.5 bn.
Rockcastle recently completed the acquisition of three Polish malls for €522 mln, and has opened two development properties, Galeria Wolomin and Galeria Tomaszow, in the last two months.
