Acucap Properties buys Sycom stake at a premium

Posted On Friday, 07 March 2008 02:00 Published by Commercial Property News
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Acucap Properties’ acquisition of a 17,5% interest in Sycom Property Fund appears to have been bought at a premium


Paul TheodosiouACUCAP Properties’ acquisition of a 17,5% interest in Sycom Property Fund appears to have been bought at a premium, and could have a dilutionary effect on Acucap, say analysts.

The company said this week it was acquiring a stake in Sycom for R787,6m and a 50% interest in the fund’s management company for R207m. This was the first step in the possible merger of Acucap and Sycom.

Investec Property analyst Kundayi Munzara said that at face value the cost of the 17,5% interest in Sycom was R22 per unit. The acquisition would result in dilution of about 20% at Acucap.

“The pricing was on a (net asset value) basis. We regard Acucap as one of the most competent management teams in the sector, and would be keen to get a better understanding of the deal from an Acucap investor’s point of view.”

Munzara said the deal would no doubt give Acucap access to “one of the best portfolios in the sector”, but it was “not obvious where the value is from a pricing point of view, given our medium term growth prospects for Sycom”.

Sycom distribution growth has been sluggish for two years. Market expectations are that its growth this year will lag that of the sector.

Catalyst Fund Managers MD Andre Stadler said the deal “looked like a full price reflecting a premium for the effective control of Sycom through the management company”.

“Two components will drive whether the acquisition adds value to Acucap, the first being whether there is more value in Sycom in terms of distribution growth than there appears to be and, second, whether they are able to achieve a merger of the funds,” said Stadler.

Acucap MD Paul Theodosiou said the transaction would dilute its distribution in the year to next March “mildly”.

Last modified on Tuesday, 22 April 2014 10:32

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