Marc Wainer: Redefine on prowl for very large property deals. Watch interview with Alec Hogg
Marc Wainer, a leading figure in South Africa's real estate sector, is on the prowl for large property deals. The executive chairman of Redefine Properties recently chatted to Alec Hogg and Gugulethu Mfuphi in the CNBC Africa studio about his plans. Redefine Properties is a listed Real Estate Investment Trust (Reit), with a market capitalisation of about R32bn. Wainer is also a director of Redefine International, which is quoted on the London Stock Exchange under the share code "RDI" and on the Johannesburg Stock Exchange under the code "RPL", and Australia's Cromwell Property Group. Wainer reminds me a lot of Donald Trump, who says that what drives him is excitement that comes from making deals rather than making money (see: How to get rich: Property tycoon Donald Trump). Also like Trump, Wainer is no spring chicken and has no intention of retiring any time soon. No disrespect to Trump: I think Wainer has a better hair stylist. – JC
ALEC HOGG: Redefine properties has acquired the property operations of the steel supplier Macsteel. It's an interesting transaction. We did talk about it on this program when it was done. The Executive Chairman Marc Weiner is with us in the studio. Innovative, Marc.
MARC WAINER: We do what we can from time to time. For us, it was a nice deal.
ALEC HOGG: Are they prettying up their balance sheet for listing or something?
MARC WAINER: I don't think it's for listing. It's no secret that the business was for sale a couple of years back. They couldn't get the price. I think the founder is now at the stage where he wants to take some money off the table. By selling the properties, it gives him the cash he wants and I think the business will continue…maybe down the line, sell off some parts or something, but I don't know the strategy. We obviously did extensive due diligence into their financials. We're pretty happy with them as a privately owned PTY Ltd Company, so we're happy with the covenant and we're happy with the deal.
GUGULETHU MFUPHI: You're happy with the deal, no doubt. I'm sure you'll be finalising a few more in your new Executive Chairman position.
MARC WAINER: We're working on a few interesting ones.
GUGULETHU MFUPHI: Any of the smaller listed players that have recently come onto the market?
MARC WAINER: No. Three years ago, Redefine started moving its focus to better quality properties, so there's really not much out there that suits our profile in terms of the smaller listed properties. We're looking for this kind of deal – large.
ALEC HOGG: Macsteel. Eric Sampson…so, he's looking to retire and he's looking to bank a few of those billions. How much of it does he own?
MARC WAINER: I think it's about 70 percent.
ALEC HOGG: Seventy percent. Wow. He's a very low profile guy.
MARC WAINER: Very low profile.
ALEC HOGG: You've presumable known him for a long time.
MARC WAINER: I met him once. This was an interesting transaction. It was brought to us by a broker. We hadn't heard about it. Two other players were looking at it. They'd been doing it for some time. It was Tuesday. The board meeting was on Friday. We had submitted an offer, subject to due diligence. They liked our offer and had a few innovative… It was a difficult deal (technically). They're properties. They have town planning issues. In a short space of time, we were therefore able to really put things in place that would happen over time, suits us, and gives them time to get the cash.
ALEC HOGG: it's a 12-year deal. Can they buy the properties back after 12 years?
MARC WAINER: There's a formula for them to buy the properties back at the end of 12 years and there's a scenario for a five-renewal on how the rental will be formulated as well.
ALEC HOGG: Quickly…IBM – the deal you did there…
MARC WAINER: That's been a long time coming. An international company that took about 12 months to get all the approvals, but we knew that we were the number one choice on our building for that. It just took a long time to dot the I's and cross the T's.
ALEC HOGG: How big is that one?
MARC WAINER: That's about 10.500m2. The building is 19. Two thousand-odd has been let. Hopefully, it will be ready by year-end. We have the strike etcetera to make up, but I think that by the time the builders go on leave, the buildings should be empty and we should be pretty well let – 75 to 80.
ALEC HOGG: Rand value.
MARC WAINER: The building's Rand value is just under R500m.
ALEC HOGG: You're going great guns. You're not retiring.
GUGULETHU MFUPHI: No, not at all. The last time I spoke to him in his office, he told me his other name is Ditsebe, by the way. You have property in your blood, don't you Marc?
MARC WAINER: Yes, I'm certainly not retiring. All I've done is passed on all the things that irritate me – the Social and Ethics Committee, the sustainability, and all those kinds of things.
ALEC HOGG: You're not supposed to say that publicly.
MARC WAINER: I can say it publicly.
ALEC HOGG: Social and Ethics Committee: you're supposed to stay on that one for life.
MARC WAINER: No. Now, that's Andrew's business and I'm really looking at acquisitions and disposals, international, and investor relations.
GUGULETHU MFUPHI: A lot less headaches for you now.
ALEC HOGG: You hear that…a lot of investor relations.
MARC WAINER: Investor relations, yes. That's where we are. Thank you.
GUGULETHU MFUPHI: It's always a pleasure speaking to Mr Marc Ditsebe Wainer, Executive Chairman of Redefine.
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