Newly established empowerment property group African Capital Property Portfolio is poised to benefit from the Public Investment Corporation’s (PIC’s) proposed takeover bid for listed property loan stock company CBS Property Portfolio.

African Capital, which is seeking to expand its fledgling property portfolio to R2bn within five years, said the takeover bid would make PIC a 45% equity partner in African Capital and improve its funding capacity to conclude acquisitions.

Unlisted property company African Capital was created through an empowerment deal facilitated by CBS Property Portfolio in November last year.

At the formation of African Capital, CBS owned a 45% interest, with 51% being owned by Abelusi, a broad-based empowerment consortium led by businessman Zwelakhe Sisulu.

Sisulu is the brother of Housing Minister Lindiwe Sisulu.

The remaining 4% of African Capital is held by the Menziwa Trust.

In a transaction that would be valued at about R2,3bn, CBS announced in March that the PIC had made a takeover bid for it.

African Capital MD Jacques van der Heyde says the PIC has an option to acquire a 30% interest in African Capital.

Van der Heyde says the pending transaction between CBS and PIC would in effect make the PIC a 45% equity partner in African Capital.

He says the PIC would assist African Capital with the funding of acquisitions.

The CBS transaction value of R2,3bn illustrates the PIC’s commitment and interest in increasing its exposure to property, Van der Heyde says.

“We are very pleased with the PIC-CBS transaction and the positive impact it could have for African Capital’s business.”

African Capital says it has also concluded its first property acquisition since its formation in November.

It has acquired four commercial properties valued at about R80m from CBS.

The properties were acquired at a yield of 9,7%.

“We are looking to acquisitions with yields higher than 9%,” says Van der Heyde.

The acquisition was financed by Standard Bank Property Finance.

African Capital’s initial acquisition strategy is primarily focused on purchasing property assets valued at between R20m and R100m in the office property sector.

Van der Heyde says the group will also consider investments in the industrial and retail property sectors.

He says African Capital is well positioned to benefit from the property sector transformation charter.

“The property transformation charter, released last year, creates opportunities for any black or black economic empowerment players in the industry,” Van der Heyde says.