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SA Corporate set to acquire R1bn portfolio

Posted On Wednesday, 09 May 2007 02:00 Published by eProp Commercial Property News
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Listed property unit trust SA Corporate Real Estate Fund said it had entered into agreements to acquire a portfolio of properties worth more than R1bn

Craig EwinThis would be the largest property portfolio transaction by the fund to date.

The property unit trust, which has a market capitalisation of just less than R8,5bn, said the proposed transaction would increase its market capitalisation to the R9,5bn level and move the size of its property assets from R6,6bn to more than R7,6bn.

SA Corporate executive director Craig Ewin said the fund was expanding its portfolio with acquisitions that would be "earnings enhancing and fit the profile of the portfolio".

Peter Sparks, an executive director-designate of SA Corporate and MD of SA Corporate's recent acquisition, SA Retail Properties, said SA Corporate had been pursuing the transaction for about three months.

In terms of the transaction, SA Corporate intends acquiring a portfolio of 52 properties worth more than R1bn from Collins Property Group.

A due diligence investigation of the portfolio is under way.

The predominantly industrial portfolio was nationally spread, said Sparks. He said the property portfolio consisted mainly of long triple-net leased single-tenanted properties.

A triple-net lease refers to an agreement where the tenant pays the operating costs and not the landlord.

Sparks said the vacancy factor in the portfolio was close to zero and that a large number of the properties were tenanted by blue-chip tenants.

At present, retail property comprises 66% of SA Corporate's property portfolio, while industrial properties make up 28%. Offices comprise 6%.

If the transaction was successful it would increase the industrial component of the portfolio to 39% and reduce the percentage of retail properties to 56%. Offices would decrease to 5%.

Sparks said that following this transaction, SA Corporate would be "aggressively pursuing the acquisition of office properties" to "normalise" the fund's "current underexposure to offices".

He also said the fund's pipeline of property acquisition activity should increase SA Corporate's market capitalisation to more than R10bn this year.

Ewin said the proposed transaction still required final approval from SA Corporate.

He said the company would be looking to fund the acquisition with a combination of units and debt.

SA Corporate has now gained control of 99,8% of listed property loan stock company SA Retail Properties.

Erwin said SA Retail would be delisted once the remaining units had been expropriated in terms of section 440K of the Companies Act.

In March, SA Retail Properties received the green light for its proposed acquisition of a R1,025bn property portfolio from Sharemax Investments.

The portfolio would now be absorbed into SA Corporate.

Last modified on Thursday, 24 April 2014 16:38

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