Resilient Announces ZAR1bn Rights Offer
News: On April 14, South Africa-based Resilient Property Income Fund announced that it will undertake a rights offer with the aim of raising ZAR1bn (USD95.15mn). Shareholders of Resilient will be offered a total of 19,230,769 units in the ratio of 6.55582 rights offer linked units for every 100 linked units held by them on May 2. The subscription price for rights offer linked units was ZAR52 (USD4.95) per rights offer linked unit. The company will use the proceeds from the rights offer for funding its pipeline of acquisitions and developments as well as for strategic opportunities. Resilient had not received any irrevocable undertakings from existing linked unit holders to participate in the rights offer.
BMI View: Commercial real estate expansion is dependent on a healthy macroeconomic environment. South Africa's economic prospects have deteriorated amid rapid currency depreciation and rising tensions in the critical mining sector. We are forecasting real GDP growth of 3.3% in 2014, with risks weighted firmly to the downside. Poor economic growth adversely affects the sector, as it dampens both property fundamentals and capital markets, putting downwards pressure on tenant retentions, rental growth, yields, development activity, financing and asset values.