Hyprop lands 31% stake in Sycom fund

Posted On Tuesday, 30 October 2007 02:00 Published by Commercial Property News
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Hyprop Investments said it had acquired a 31,3% interest in listed property unit trust Sycom Property Fund in a R1,24bn transaction

By Nick Wilson

Hyprop Investments, which is focused on retail property said on Monday, it had acquired a 31,3% interest in listed property unit trust Sycom Property Fund in a R1,24 billion transaction.

Hyprop management labelled the move as “friendly”, saying it viewed the acquisition as a “strategic” investment. It was not attempting a takeover.

Hyprop MD Pieter Prinsloo said that because Sycom was a property unit trust the control of the fund was vested in an external management company, and Hyprop could not take over Sycom.

“We see it as a strategic stake in a well-managed, quality property portfolio,” said Prinsloo.

Sycom’s retail property assets, which made up 55% of the fund’s property portfolio, were similar in quality to Hyprop’s retail property assets. “We saw an opportunity to acquire a significant stake at good value.”

The transaction, which is mostly a unit swap deal, will see Hyprop’s market capitalisation increase from about R6,9 billion to about R7,9 billion. Hyprop’s property assets will increase 15% to about R7,8 billion.

In terms of the transaction, Hyprop will acquire 64,2-million Sycom units from Redefine Income Fund, Old Mutual, Stanlib and Investec, and on the open market.

Hyprop will settle the deal with a cash payment of R51,3 million, the issue of 21,7-million Hyprop units and swapping 5,6-million units it owns in Resilient Property Income Fund for Sycom units.

Prinsloo said the transaction would be “distribution enhancing” for Hyprop unitholders next year.

Indirectly, the deal would also increase Hyprop’s exposure to offices because the remainder of Sycom’s property portfolio was offices. But Prinsloo said Hyprop’s focus would remain retail oriented.

Sycom is managed externally by Parkdev, which also asset manages property fund Attfund, which has about R6,5 billion worth of prime property assets.

Sycom CEO Neno Haasbroek said that for Hyprop the transaction meant “buying into assets which are very similar to their own but at a yield that is income enhancing for Hyprop”.

“We had a meeting with Hyprop, and it was stated the acquisition of the stake was friendly, and that it’s an investment,” said Haasbroek.

Hyprop’s Prinsloo said he was satisfied with Sycom’s growth prospects on the strength of its asset base and the management style of Parkdev, which took over management of Sycom in July last year.

Evan Jankelowitz, a fund manager at Stanlib, which was one of the parties that sold Sycom units to Hyprop, said it would be “interesting to see what the end game will be in acquiring such a significant stake in Sycom”.

“In a market where quality physical assets are hard to come by, Hyprop have effectively managed to think out of the box and get exposure to superb quality assets through the listed market,” said Jankelowitz.

The total value of Sycom’s property portfolio was R3,5 billion in March last year. The fund’s regional shopping centres include Fourways Crossing, Vaal Mall, N1 City, Somerset Mall, Paarl Mall and a 22,5% interest in a German shopping centre, Nova Eventis.

Hyprop is considered the blue chip retail property company on the JSE. Among its assets are flagship property Canal Walk Shopping Centre in Cape Town and Hyde Park shopping centre in Johannesburg.

Business Day

Publisher: I-Net Bridge
Source: I-Net Bridge

Last modified on Friday, 14 June 2013 22:34

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