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Wichford's southern suitor

Small-cap property player Wichford is considering a merger with Aim-listed South African property company Redefine International, having appointed investment bank Rothschild to conduct a strategic review of its business.

Discussions "are at an early stage" but Redefine, a £230m company that already owns 21.7 per cent of Wichford's shares, is a serious suitor. Parent company Redefine Properties, which is listed in Johannesburg, owns a shareholding in Wichford's external property manager.

Wichford's exposure to government-occupied property means its shares suffered after the spending review. Nearly £1m of current passing rents have a lease event before April 2011, meaning renewals will have to be rubberstamped by the Treasury.

IC View

Wichford's recent refinancing successes have not been reflected in its share price and it's worth noting that low average rents of £12.50 per square foot across its portfolio could strengthen its hand in negotiations. With interest from Redefine, and rated on a 14 per cent discount to NAV, Wichford shares remain a speculative buy at 7.5p.

LAST IC VIEW: Buy, 6.5p, 29 October 2010

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