| Mon 28 May 2007, 14:04 | | SAC - SA Corporate - - R1 Billion Buffcol deal wil |
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SAC
SAC
SAC - SA Corporate - - R1 Billion Buffcol deal will boost SA Corporate assets to
R7,8 billion
SA Corporate Real Estate Fund
(formerly Martprop Property Fund)
(Incorporated in the Republic of South Africa)
Share Code: SAC & ISIN Code: ZAE000083614
A Collective Investment Scheme in property registered in terms of the Collective
Investment Schemes Control Act, No. 45 of 2002 and managed by SA Corporate Real
Estate Fund Managers Limited
(formerly Marriott Property Fund Managers Limited)
(Registration number 1994/009895/06)
("SA Corporate" or "the fund")
Press Release
R1 BILLION BUFFCOL DEAL WILL BOOST SA CORPORATE ASSETS TO R7,8 BILLION
The asset value of the SA Corporate Real Estate Fund would increase to more than
R7,8 billion from the current R6,8 billion through the acquisition of a
portfolio of 51 properties from Collins Property Group (Pty) Ltd and Buffet
Investments ( Pty) Ltd, the fund said today.
The proposed acquisition, announced earlier in May, would be another important
step in SA Corporate`s expansion strategy said fund CEO, Craig Ewin. We are
aiming for a R10bn portfolio in the short to medium term and to remain within
the top 3 in the sector in market capitalisation value, added Ewin. This will
ensure that the fund remains relevant amongst investors in terms of size,
entrenching the various benefits of critical mass.
Peter Sparks, executive director of SA Corporate negotiating the transaction,
said a due diligence investigation of the Buffcol portfolio had been completed.
"It is an excellent portfolio of well located properties, predominantly
industrial, let to well known South African corporates on long leases."
The transaction would reduce SA Corporate`s retail weighting to just under 60%
and increase the industrial weighting component of the portfolio to 33% from
28%. Management were more than comfortable with this overweight industrial
weighting given the excellent rental growth prospects being evidenced in this
sector, says Sparks. He added that the fund would be looking to add to the
office component where the fund is underweight and where management generally
expects good rental growth to be found.
Sparks said the acquisition would not materially affect the geographic profile.
Gauteng properties in a consolidated portfolio would account for 40% of income,
KwaZulu-Natal properties for 47%, Cape properties for 13%, with a small balance
from Mpumalanga investments.
He said the ten largest properties in the Buffcol portfolio by value accounted
for about 45% of the portfolio value at R462 million. The portfolio`s top 10
tenants are Chep SA, Bosch, Afrox Healthcare, Shell SA, MSA, Unitrans Motors,
Tiger Wheel and Tyre, Supply Chain Services, the SA Police Service and BDO
Spencer Stewart.
"The lease expiry profile is favourable with most leases expiring between 2012
and 2015 and 77% of the leases expiring after 2011. Lease expiries are staggered
and don`t present a risk profile in any particular period.
"The vacancy factor in the Buffcol portfolio is zero. This demonstrates the
quality of the portfolio and the lease profile and fits neatly with the existing
SA Corporate portfolio where the current vacancy factor is 1.5% Sparks said the
initial yield of the acquisition portfolio of 8.15% was commensurate with the
quality of the portfolio and offered good value in the current property
investment market where such portfolio opportunities are hard to come by.
With rentals within the portfolio being at current market related levels and
with the demand for superior industrial property and consequent rental growth
which is currently being experienced, this portfolio is expected to offer good
reversionary growth as leases expire" says Sparks.
Sparks said the acquisition is still subject to regulatory and statutory
approvals and the procurement of the necessary funding.
Ewin says management intends to fund the transaction through a combination of
new equity and debt. SA Corporate`s current debt levels are at a low 13% and
there is merit to increasing this to benefit from the advantages that debt
leverage offers. This will be managed so as to mitigate against earnings
dilution in the short term.
ends
28 May 2007
Investment bank and sponsor
Nedbank Capital
Date: 28/05/2007 14:04:01 Produced by the JSE SENS Department.
