Sam Leon, CEO of the Investec Property Fund
The Investec Property Fund announces the acquisition of a portfolio of five properties from Investec Property for a total purchase price of R871 million at a yield of 8.25%. The portfolio includes two office properties, two industrial properties and a retail mall. The seller, Investec Property, is the manager of the Investec Property Fund and a wholly-owned subsidiary of Investec Limited.
The acquisition introduces a valuable property portfolio into the Fund’s asset base and will increase the Fund’s assets to R8.1 billion. The properties in the portfolio are situated in prime locations with a high quality tenant mix and long lease expiry profiles. The portfolio has weighted average lease expiry of 5.8 years which will augment the Fund’s underlying long term lease expiry profile.
The portfolio includes the recently completed iconic office building, valued at R352 million, at 30 Jellicoe Avenue in Rosebank, which is strategically located in the heart of Rosebank, close to the Gautrain. The building boasts a strong tenant mix with Fluxmans Attorneys as the major tenant with another key tenant being Standard & Poor’s. This boosts the Fund’s existing presence in the strategically important Rosebank business node as it already owns The Firs niche retail and offices. The second office property is 34 Ingersol Road, Menlyn, Pretoria, leased to ADvTECH, a leading listed education and recruitment group.
An exciting addition to the Fund’s robust retail portfolio is the recently refurbished Fleurdal Mall, a well-established retail mall that is dominant in the southern suburbs of Bloemfontein. The centre is fully let with a total GLA of 24,370m2 and is easily accessible from the N1 highway. The mall is anchored by Checkers Hyper and has an attractive tenant mix with 85% of tenants comprising national retail chains including the Pepkor Group, Mr Price Group and Foschini Group.
The two industrial properties are 52 Jakaranda Road, Hennopspark (Centurion) tenanted by RMD Kwikform, a subsidiary of the FTSE listed Interserve and Caterpillar’s premises at the corner of Diesel Road and Industrial Roads, Isando.
Sam Leon, CEO of the Investec Property Fund said, “This significant portfolio acquisition underscores the Funds consistency in investing in long term sustainable real estate with capacity for growth while at the same time being defensive to economic headwinds. The acquisitions also reinforce the value to the Fund of the Investec connection.”
Approximately R525 million of the R871 million purchase price will be settled through the issue of new shares, with the balance to be settled in cash. The acquisition is subject to the fulfilment of due diligence investigations and approval by competition authorities. Investec Property Fund shareholders will be invited to vote on the transaction at the next general meeting. The anticipated effective date of the transaction is 1 February 2015.
The transaction will see Investec Bank’s shareholding increase to 34.9% from 29%. This is a show of support to the Fund as the Bank had recently sold down its shareholding from 50% in order to create capacity to support future growth.
The Fund will release its interim results on 20 November.