Paraprop buys three sites for R42,2m

Posted On Tuesday, 30 March 2004 02:00 Published by eProp Commercial Property News
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Property loan stock company Paramount Property Fund (Paraprop) said it was acquiring a retail property, as well as two office blocks, for a total consideration of R42,2m.

Property-Housing-ResidentialParaprop said the acquisitions were in line with its strategy of growing its property portfolio to increase market capitalisation, improve its capital structure and benefit from diversification.

The company will be acquiring the 13193m² Goodwood Mall in Goodwood, Cape Town. The centre, which would be bought from Eswic Investment, was fully let with no large vacancies expected in the foreseeable future, said Paraprop. The purchase price of R27,5m would be settled in cash, and would be funded through the placing of 8,2-million linked units issued at R3,34 each.

Paraprop said it was also purchasing two office buildings, one in Paarl in Western Cape and the other in Rosebank, Gauteng.

It said the two office blocks were also fully let and both were occupied by long-term single tenants.

The Paarl office building, which will be bought for R7,5m, is occupied by PricewaterhouseCoopers, and is on a long-lease extending to March 2009. The Rosebank building, which will be bought for R7,2m, is occupied by Tsebo Outsourcing on a lease that extends to April 2009.

Paraprop said the purchase consideration for the two buildings would be settled from bank borrowings and available cash resources.

Paraprop MD Rodney SquireHowe said once the acquisitions were completed, Paraprop's market capitalisation would be about R240m, while its asset base would increase to about R980m. It wanted to improve the balance sheet by marginalising its convertible B-class debenture system.

When management bought the initial property portfolio for the company, which was launched in March 2001, it paid 60% in cash, 20% in linked units and 20% in convertible B-debentures.

Every year one-fifth of debentures would convert into linked units and in the in between period, the B-debentures carried no interest payments.

Absa Bank's acquisition of a 34% stake in Paraprop in July last year had reduced the ratio of the B-debentures to total equity from 45% to 34%. Further acquisitions would bring it down to 22%, said Squire-Howe. 

Last modified on Saturday, 10 May 2014 11:46

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