Capital to bulk up by buying a R760m basket of property

Posted On Thursday, 22 July 2004 02:00 Published by eProp Commercial Property News
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LISTED property unit trust Capital Property Fund, chaired by businessman Cyril Ramaphosa, is to acquire a large bundle of properties worth R760m from four key players in the property industry.

Barry StuhlerCapital Property Fund will buy the properties from Old Mutual, Resilient Property Income Fund, Standard Bank and Acucap Properties.

The acquisition is aimed at reviving the fortunes of the fund by boosting its portfolio. It will lift Capital's assets past the R1bn mark and increase its market capitalisation to about R900m.

In another property deal announced yesterday, Millennium Consolidated Investments (MCI) Properties, part of the Millennium Consolidated Investments (MCI) group, which is also chaired by Ramaphosa, said it would acquire R50m worth of units in Capital Property Fund. This represents an interest of about 5% in Capital.

Capital MD Barry Stuhler said the purchase of units in the fund by MCI broke new ground.

It was the first time an empowerment group was taking a stake in a listed property fund as opposed to buying a stake in the asset management company of the fund.

Last month, MCI Properties acquired a 50,4% interest in Property Fund Managers, the asset management company of Capital Property Fund, in a black empowerment deal facilitated by Old Mutual.

In terms of that deal, Resilient Property Income Fund acquired 30% of Property Fund Managers, with the remaining 19,6% going to Old Mutual.

Thando Sishuba, MD of MCI Properties and executive director of Capital, said yesterday the acquisition of the 5% stake in Capital was important.

"It aligns our interests as coasset managers to those of the investors," he said.

About the purchase of the new properties , Ramaphosa said he believed the "enlarged Capital Property Fund enhances its attractiveness to both current and prospective investors".

Explaining the background to the property deal, Stuhler said the listed property loan stock fund Resilient had planned to launch a new listing in conjunction with Old Mutual.

Then Resilient acquired a 25% stake in Capital a few months ago.

Capital was trading below its net asset value at the time, while the rest of the market was trading at a premium, Stuhler said.

Instead of embarking on a new listing, it made sense to use the existing fund as the base for an enlarged fund, he said.

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