Financial services and insurance firm Liberty Group has announced that it will buy out all minority shareholders of retail-centred real estate investment trust Liberty Two Degrees (L2D) at R5.55 a share, which is a premium of 46.4% to the volume-weighted average price at which L2D has been trading over the past 30 days.

The transaction will consolidate the Liberty Group’s real estate assets. Following the consolidation, L2D will form part of the greater Standard Bank Group and will be delisted from the JSE main board. The transaction is expected to be finalised before the end of 2023.

“Liberty has proposed a transaction that would unlock significant value for L2D shareholders while balancing the needs of its other stakeholders. We value our investment in L2D and expect this consolidation to further enhance the strong legacy already created by both businesses in the property sector,” said Liberty Group chief executive Yuresh Maharaj.

“L2D is excited about adding value to the greater Standard Bank Group. This consolidation is an important step in L2D’s value creation journey where we aim to create experiential spaces to benefit future generations. This transaction will enable L2D to scale within a larger organisational context and create additional value for our stakeholders,” said L2D CE Amelia Beattie.

Since listing on the JSE in December 2016, the listing of L2D has remained challenging owing to several factors. The macro-economic environment has resulted in a valuation deterioration across the listed property sector since 2018, exacerbated by the Covid-19 pandemic, the company said in a statement.

The relative illiquidity of L2D, primarily as a result of a limited free float, further contributes to the discount at which L2D shares trade relative to underlying net asset value.

Notwithstanding L2D’s high-quality assets and market-leading operational performance, these adverse market conditions appear likely to endure for the foreseeable future and limit the strategic options that are available to L2D while it remains in the listed environment.

“Against this backdrop, Liberty Group is of the view that the options to unlock the full potential of the L2D property portfolio would be enhanced through a consolidation of L2D’s ownership within the group and the management of the consolidated portfolio outside of the listed environment,” L2D said in a JSE statement.

Further, in terms of its employee share scheme, an offer will be made to all of the participants in L2D’s restricted share plan to replace it, the company said.

L2D's share price on the JSE rose by more than 40% following the announcement on July 27.