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Category 2 Transaction Announcement – Launch of South African Funds Management Business
Burstone Group Limited
Approved as a REIT by the JSE
(Incorporated in the Republic of South Africa)
(Registration Number 2008/011366/06)
Share Code: BTN ISIN: ZAE000180915
Bond Code: BTNI
("Burstone" or the "Group")
CATEGORY 2 TRANSACTION ANNOUNCEMENT – LAUNCH OF SOUTH AFRICAN FUNDS
MANAGEMENT BUSINESS
1. BACKGROUND
The Board of Directors of Burstone is pleased to announce a significant development in the
execution of its strategy to build a diversified, capital-efficient international real estate
investment and funds management business.
Burstone has entered into binding transaction agreements with Nedbank Property Partners
("NPP"), to establish a South African funds management platform (the “NPP Partnership”),
initially seeded with a portfolio of 14 Burstone-owned South African retail and industrial assets,
with a gross asset value of approximately R5.4 billion (the “SA Core Plus platform”).
NPP is a real estate focused equity and mezzanine financing business within Nedbank
Corporate and Investment Bank, a division of Nedbank Limited. NPP is a nimble and like-
minded capital partner with deep expertise and insights across all segments of the real estate
market.
Burstone will retain a 50% equity interest in the SA Core Plus platform and will act as both fund
and asset manager in the platform, providing the Group with continued economic exposure to
the underlying assets as well as recurring management fee income.
The SA Core Plus platform has been structured from inception to enable the future introduction
of additional private and institutional capital, creating a scalable, permanent capital vehicle
through which third-party investors can participate alongside Burstone in the growth of a
diversified South African real estate portfolio. The NPP Partnership is the first close of the SA
Core Plus platform and Burstone is currently engaged with a significant institutional investor
for a second close.
The capital released will provide Burstone with significant flexibility to support its future growth
strategy, including providing sufficient capital to meet the Group’s first-loss obligations
associated with its European logistics platform.
2. RATIONALE
Burstone’s funds management strategy was launched in Europe through the Blackstone
strategic partnership in the Pan-European logistics platform and European light industrial
platform alongside Hines European Real Estate Partners III (“Hines”), with Australia having
been launched with the Irongate Group.
As one of its core strategic deliverables, Burstone has remained committed to forming a South
African-focused, high-quality and diversified real estate funds business. Burstone believes the
SA Core Plus platform will meet its strategic objectives and will deliver the following benefits to
Burstone shareholders:
- In line with Burstone’s stated strategy of co-investment and asset management activity,
Burstone will retain a 50% equity stake in the SA Core Plus platform and provide fund and
asset management services to the SA Core Plus platform. The transaction therefore
enables Burstone to recycle capital from its existing portfolio at an attractive valuation, while
retaining 50% of the equity exposure to the assets and the associated fund and asset
management mandates.
- Strategic partnership with NPP, which brings a demonstrable and accomplished track
record across various real estate asset classes with various partners across the South
African landscape.
- Significant strategic investor alignment, including joint control between Burstone and NPP
and the quality of the SA Core Plus platform creates a unique South African investment
opportunity that can immediately attract new third-party capital and to continue to scale
meaningfully, with ongoing and new engagements underway.
- The SA Core Plus platform, catalysed through the first close with NPP, has been designed
as a permanent capital vehicle with no defined exit term, the ability to allow for ease of
investor entry, exit or dilution and no adverse impact to Burstone’s existing REIT status.
- Raising R677 million of external third-party equity capital at attractive pricing, with an
implied, blended discount of 5.0% to the last reported book values as at 31 March 2026.
- R4.5 billion capital released to support redeployment into local and international growth
opportunities. The capital also de-risks the first loss obligations associated with Burstone’s
European logistics platform.
- Burstone earning recurring fee income by providing ongoing fund and asset management
services to the SA Core Plus platform.
- Enhancing Burstone’s diversified income model with a material increase in fee revenue to
19.3% (15.5% of total earnings for the year ending 31 March 2026). Third-party assets
under management increases by 10.9% to R26.8 billion and equity under management
increases by 4.5% to R11.5 billion.
- The transaction is expected to be earnings accretive to Burstone.
- The NPP Partnership is expected to result in a reduction of Burstone’s 31 March 2026
reported loan-to-value (“LTV”) from 39.6% to 17.5% to 19.5% and the look-through LTV
also improving from 48.6% to 40.5% to 42.5% (subject to any South African asset sales or
additional transaction activity).
3. SALIENT TERMS OF THE NPP PARTNERSHIP
The SA Core Plus platform assets will reside in a stand-alone, unlisted structure, with Burstone
and NPP each holding a 50% equity interest on day one (i.e. the date on which NPP becomes
a party to the NPP Partnership (the “Closing Date”)). The SA Core Plus platform is established
as an en commandite partnership in nature, with the ability to accommodate the dilution of
existing investors and entry of new investors.
The transaction has been structured to retain fiscal transparency from the perspective of
investors, with no adverse consequences to Burstone’s REIT status.
Assuming there are no unexpected delays on the transfer of any properties to the SA Core
Plus platform, NPP will acquire its 50% equity interest in the SA Core Plus platform for
approximately R677 million (the “NPP Consideration”). The NPP Consideration will be subject
to a 5% asset pricing escalation, starting 3-months post receipt of Competition Commission
approval, for a maximum 12-month period thereafter on properties that have yet to transfer to
the SA Core Plus platform.
The establishment of the NPP Partnership remains subject to customary conditions precedent
and regulatory approvals, including Competition Commission approval, at which point the
transaction becomes unconditional (the “Unconditional Date”). The Closing Date is triggered
by the later of the Unconditional Date or the transfer of at least 70% of the properties, quantified
by value, to the SA Core Plus platform.
The NPP Consideration will be payable in cash by NPP, with:
i. a portion thereof payable on the Closing Date, in relation to at least 70% of the
properties by value; and
ii. the remainder thereof payable in tranches as and when registration of transfer of the
remaining properties occurs.
Burstone will earn fund and asset management and acquisition fees on market related terms,
with the ability to earn an additional performance fees on the basis that certain hurdles are
achieved.
The initial LTV of the SA Core Plus platform will be 70%, with the intention to reduce the LTV
on the introduction of new third-party capital. The target LTV will be dependent on the asset
strategy and investment mandate of the incoming investors.
The effective date of the transaction is anticipated to be no later than 1 December 2026.
4. OVERVIEW OF THE SA CORE PLUS PLATFORM
The initial seed portfolio comprises five retail properties and nine industrial and logistics
properties located across South Africa, with a gross asset value of approximately R5.4 billion
and a blended asset yield of 8.4%. The retail portfolio includes dominant rural and peri-urban
shopping centres, while the industrial portfolio consists of well-located warehousing and
logistics assets supported by strong tenant covenants and long-term lease profiles.
No. Property Name Location Type Gross Weighted
Lettable average
Area (m2) monthly
rental /m2
1. Dihlabeng Mall Free State Retail 31,222 R232.8
2. Fleurdal Mall Free State Retail 30,792 R210.8
3. The Neighbourhood Square Gauteng Retail 6,074 R262.2
4. Kriel Mall Mpumalanga Retail 21,465 R172.6
5. Zevenwacht Mall Western Cape Retail 39,981 R247.5
6. 181 Barbara Gauteng Industrial 51,097 R90.4*
7. 181 Barbara - WACO Gauteng Industrial 14,375 R90.4*
8. 130 Gazelle Gauteng Industrial 10,853 R90.4*
9. 15 Pomona Gauteng Industrial 9,038 R90.4*
10. 16 Pomona Gauteng Industrial 7,394 R90.4*
11. Riverhorse - Midas KwaZulu-Natal Industrial 11,112 R90.4*
12. Riverhorse - Adcock Ingram KwaZulu-Natal Industrial 9,715 R90.4*
13. Riverhorse - Discovery Health KwaZulu-Natal Industrial 6,134 R90.4*
14. Riverhorse - ABB KwaZulu-Natal Industrial 2,842 R119.1
*The weighted-average monthly rental for all single-tenanted properties have been aggregated.
The SA Core Plus platform has been priced at a gross asset value of R5.155 billion,
representing a 5.0% discount to the R5.429 billion book value of the properties, as at 31 March
2026. This implies a blended 8.4% asset yield, based on a 12-month rolling net operating
income of the SA Core Plus platform of R435 million.
5. BURSTONE SEGMENTAL ANALYSIS
All figures in R’billions
Segment 31 March 2026 Post-transaction +/- % change
SA direct: Office 4.9 4.9 - -
SA direct: Industrial 2.8 1.4 (1.4) (50%)
SA direct: Retail 6.2 2.2 (4.0) (65%)
Total - direct assets 13.9 8.5 (5.4) (39%)
Co-invest: Core+ (SA) - 0.7 0.7 n/a
Co-invest: PEL (EU) 1.7 1.7 - -
Co-invest: Irongate (AU) 0.7 0.7 - -
Total – co-investments 2.4 3.1 0.7 28%
Total Investment Base 16.3 11.6 (4.7) (29%)
6. CLASSIFICATION OF THE TRANSACTION
The NPP Consideration (which equates to Burstone’s 50% contribution to the NPP Partnership),
after taking into account the maximum purchase price after the inclusion of the maximum
potential pricing escalation amount (which is structurally capped in the transaction agreements),
exceeds 10% but is less than 30% of Burstone’s market capitalisation and accordingly, the
disposal by Burstone of its 50% equity interest in the SA Core Plus platform constitutes a
Category 2 transaction in terms of the JSE Listings Requirements.
Burstone notes that its previous dividend guidance of 4% to 6% distributable income per share
growth remains unchanged and that the financial information included in this announcement has
not been reviewed by the Group’s external auditors.
Johannesburg
25 September 2026
Sponsor and Financial Advisor
Investec Bank Limited
Forward-looking statement
This announcement contains certain forward-looking statements which relate to the possible future
performance and financial position of the Group. All forward looking statements are solely based
on the views and considerations of the Board of Directors. These statements involve risk and
uncertainty as they relate to events and depend on circumstances that may or may not occur in the
future. The Group does not undertake to update or revise any of these forward-looking statements
publicly, whether to reflect new information, future events or otherwise.
Date: 25/09/2026 04:00:00
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