Key deal for CBS and Zenprop

Posted On Thursday, 20 April 2006 02:00 Published by Commercial Property News
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CBS Property Portfolio will embark on a strategic development alliance with Zenprop Property Holdings

CBS Property Portfolio will embark on a strategic development alliance with Zenprop Property Holdings, the group says.

The deal secures CBS the first right of refusal for five years on properties that Zenprop elects to offer for sale. Accordingly, during the same period, Zenprop acquires the first refusal to the exclusive redevelopment of properties in the CBS portfolio.

CBS has already acquired five properties from Zenprop, including the Sun International property in Sandown and the State Information Technology Agency in Sunninghill.

"This formal relationship positions both parties for growth in a market with strong demand for space and property investment," says CBS director Martin Ettin.

"It also secures development expertise with a partner with interests aligned to CBS."

Gavin Klerck, who drives CBS's development division, which is involved in a number of redevelopment projects, says that the alliance will give CBS a strong advantage when growing its portfolio and income streams.

"We believe that Zenprop can unlock potential and bring the portfolio to full value," says Zenprop director Rodney Weinstein.

CBS Property Portfolio has acquired 12 prime properties, including the five from Zenprop, for R616m, driving CBS's property assets to more than R1,7bn, with 47 properties covering a gross lettable area of 270,84m².

The properties comprise offices, mostly with long triple net leases, the bulk of which expire between 2011 and 2014, with an effective forward yield of 8,44% and an average rental escalation of 10,2% per annum.

"These acquisitions allow CBS to provide investors with growth in income and capital over the medium to long term," says CBS director Derek Greenberg.

He says the acquisitions increase the critical mass of the portfolio, while rental escalations add to the above-average growth in distributions to unitholders.

A year ago, CBS owned property exclusively in Western Cape. As a result of its recent acquisitions and current deals, 53% of its portfolio by gross lettable area is now located in Gauteng, with 31% in Cape Town and the remaining 16% in KwaZulu-Natal.

CBS has swung its portfolio in favour of commercial property, which now represents 50% of the portfolio's gross lettable area. The remainder of the portfolio comprises 38% retail property, 8% industrial and 4% residential.

In part-consideration for CBS's acquisitions, there will be a vendor placing of CBS-linked units of 82,5% (R508m) of the purchase consideration, of which about R413m will be placed privately by CBS and R94m is to be retained by the vendors.

The issue price of R7,87 a linked unit represents an average forward yield of 9,36% for August this year to July 2007. CBS has support for the acquisitions, with more than 65% of unitholders having confirmed their approval.

Since listing on the JSE last year, CBS has outperformed the PLS and all share indices with capital appreciation of 30% from the R6,75 per linked unit.

Last modified on Monday, 27 May 2013 19:05

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