Calulo Properties buyout of Annuity Property Fund final

Posted On Wednesday, 19 January 2005 02:00 Published by Commercial Property News
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Calulo Properties has successfully completed its acquisition of Annuity Property Fund and has changed the name of the company to Calulo Property Fund

Mpho DialeCalulo Properties (Pty) Ltd (CLO), a subsidiary of black empowerment group Calulo Investments (Pty) Ltd, has successfully completed its acquisition of JSE-listed Annuity Property Fund, Calulo said, and has changed the name of the company to Calulo Property Fund to create a listed black empowerment property fund. 
 
In September 2004, Calulo Properties offered to purchase 95.5% of the Annuity Property Fund's linked units from Nedbank in a 600,000 rand transaction.

Previously known as Good Cape Ltd, the Annuity Property Fund is a listed property loan stock company, which comprises a single property worth an estimated 6.0 million rand.

Currently there is no trading in Annuity Property Fund linked units.
 
The due diligence process on the transaction has now been completed, Calulo Properties said, and formal transfer of ownership of Annuity is scheduled to take place early this year. At the company's Annual General Meeting on December 15, the name of the company was changed to Calulo Property Fund.
 
Said Mpho Diale, Managing Director of Calulo Investments: "The acquisition of Annuity Property Fund gives us a listed property vehicle which we intend growing on a phased basis.

"We aim to inject a first tranche of properties, worth an estimated 381 million rand, into the fund early in the new year and we hope to be able to grow the fund to a market cap of about 1.0 billion rand within two years."
 
Calulo Properties' parent company, Calulo Investments, was one of the first black empowerment companies in South Africa's energy sector. It also owns other significant interests in the petrochemical industry, mining and services industries.

Through its latest acquisition, it has now signalled its intention to expand into the listed property sector.
 
Richard Harman, the former head of Nedbank Property Partners and a former director of Growthpoint Property Fund, will be the CEO of Calulo Properties, whilst Nyameka Madikizela, formerly Executive Manager of Property at the National Ports Authority, takes up the position of Chief Operating Officer and Managing Director of the asset management company.
 
Asset management of the new fund would be conducted by Calulo Asset Management (Pty) Ltd, a company 75% owned by Calulo Investments, and the property management functions would be carried out by a new joint-venture company that had been set up between Oakwood Properties (Pty) Ltd and Calulo Properties. Calulo Investments would own 60% of this joint-venture company.
 
Harman said the properties included in the portfolio were being acquired by means of a combination of cash and paper.

They were predominantly retail centres in metropolitan and decentralised areas, underpinned by good national and line shop leases. The fund would also comprise a component of well-located commercial office space and some excellent industrial properties.
 
"This is the first of several tranches of property that the fund will come to the market with over the next four to five years," expanded Harman.

"It is understood, however, that the fund will need to grow quickly to a market cap of around 1.0 billion rand, which is the minimum level required to ensure sustainable liquidity in today's market - a pre-requirement for sophisticated investors in listed property.
 
"Essentially, growth will be focused on leveraging the fund's black empowerment (BEE) credentials to acquire good government and parastatal properties with long leases.

"New linked units will be placed with asset management funds requiring BEE credentials, BEE investors, government and state pension funds, major institutions as well as individual investors."
 
The transaction had been structured so that the fund's BEE credentials were maintained throughout the property investment value chain.

Calulo Properties and its BEE partners and co-investors would continue, as long as possible, to control a minimum shareholding of 25.1% of Calulo Property Fund's issued linked units.
 
He said Calulo accepted that, over time, there would understandably be a dilution of its 25.1% BEE stake at the listed entity level as the fund grows.

However, BEE credentials would remain strong across the value chain as a result of the corporate structure.
 
Concluded Diale: "We have assembled a strong and experienced property team and we are very bullish about the future growth and performance of the fund.

"The current portfolio has been accumulated from private vendors without the support of institutions.
 
"We have already started work on a second round of property acquisitions for early in 2005, and hope to gather investor support for this next tranche.

"We believe our fund provides institutions with a high yield, excellent diversification and legitimate BEE credentials."

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