Following RMB Holdings' mega payout – what's left?

Investing in property has generally been considered a good investment for the long term, but for this REIT in disguise, it's been raining dividends following the unbundling of FirstRand.

In June 2020, RMB Holdings took the spotlight after the share price came down to around R1.50; this was because of the successful parting of ways (unbundling) with FirstRand. The unbundling was supported and voted for by shareholders.

Following the event, the stock surged, breaking the R1.90 mark by April 2021 due to the first R0.80 special dividend payout. The reason for this payout was that conditions for the Bucharest development deal were not fulfilled by the due date, and cash was returned to shareholders.

Fast forward to 2022, the company declared a further special dividend of R1.41 following the selling of shares in its European business, Atterbury Europe to Brightbridge, which drove the stock to reach its R2 highs.

What’s the twist?

According to the company: "Brightbridge, as an existing shareholder of Atterbury Europe, is the most suitable acquirer of RMH Property's interest in Atterbury Europe as part of this monetisation strategy, particularly in view of their deep knowledge of the businesses and contractual arrangements within the Atterbury Europe group. Having considered all relevant quantitative and qualitative factors, the RMH Board has concluded that the Disposal is aligned with RMH's monetisation strategy to realise value for Shareholders."

As of 31 March 2022, RMB Holdings had a net asset value of $3.9 billion, a 12% increase from the previous comparative period (PCP); this was mainly due to the R543 million increase in property investments valuation, compared to a loss of R22 million PCP. The sale of Atterbury Europes to Brightbridges was considered at $1.75 billion, compared to the Independent Financial Reporting Standard (IFRS) NAV of $2.23 billion.

Speaking to shareholders, RMB Holdings CEO, Brian Roberts, added: "If we waited for a patient monetisation event, then the IFRS NAV would probably be realised… The R1,75 billion is the offer that has been received for the whole stake without the risk of time and/or liquidity.

This is not for the individual assets of Atterbury Europe. Brightbridge has made an offer to buy RMH’s shares and loan account in Atterbury Europe.”

What’s left?

After disposing of Atterbury European shares (which contribute 58% of RMB Holdings' NAV by 31 March 2022), the holding company owns the following stakes through RMH Property.

• 27% Atterbury Property Holdings – a real estate development company focused on office, retail and industrial property.
• Integer Properties – spread across the commercial, industrial, retail and residential sectors; Integer Properties are also partners who have inked attractive development opportunities. The stakes are as follows: Integer Properties 1 Proprietary Limited 9%, Integer Properties 2 Proprietary Limited 20%, Integer Properties 3 Proprietary Limited 50%
• 10.9% Divercity urban property fund – the fund focuses on pre-identified precincts or corridors in cities rather than single properties.

What’s next?

Even though RMB Holdings is not listed as a Real estate investment trust (REIT), the holdings company will continue with its property dealings through RMH Property. As of writing, RMB Holdings is trading at R0.59 following the ex-dividend of the recent payout that was paid on 10 October 2022.

“The core strategy of RMH remains to monetise the RMH Property portfolio, in an orderly manner, and to return maximum value to RMH shareholders. To this end, RMH Property continues to work towards realising investee companies over a four- to five-year period, with the smaller assets being the near-term focus. Any changes to RMH’s stated strategy would be in consultation with shareholders.” Robers said

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Sources – RMB Holdings