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SAC
SAC
SAC - SA Corporate Real Estate Fund - Funds R1 Billion Purchase With New Equity
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")
SA CORPORATE FUNDS R1 BILLION PURCHASE WITH NEW EQUITY
SA Corporate Real Estate Fund said today it would fund the R1 billion Buffcol
portfolio of 40 primarily industrial properties from the Collins Property Group
through an earnings-enhancing issue of 244 180 780 units at a clean price of 395
cents a unit.
SA Corporate CEO, Craig Ewin, said that while it was originally planned to part
fund the transaction by debt, the increased cost of debt funding had led to the
decision to issue new equity.
"By fully funding the acquisition through new equity, existing unitholders will
benefit as distributions will be enhanced, albeit marginally, and risk of
interest rate movement ahead of the property transfers has been avoided, " said
Ewin.
"With the placing of almost R1 billion in new equity, the market capitalisation
of the fund will increase to about R8 billion, with further debt funding
capacity created for appropriate future opportunities. Importantly we also
expect the issue of new units to enhance free float measurements as determined
by the JSE.
The new units have been placed at a premium to the current trading price. Since
there is arguably almost a full six-month distribution in the current price,
this translates to a premium on the 14-day volume weighted average price in the
order of 7%."
Ewin said there had been good demand for the SA Corporate equity with an 18%
over-subscription of R170 million. SA Corporate`s forward yield based on the
2008 audited forecasts was in the high sevens, he said.
"This transaction follows the recent placing of R1 billion of new equity to fund
the acquisition of the Sharemax portfolio of 10 retail properties. One of SA
Corporate`s stated objectives is to expand the portfolio and increase the market
capitalisation. To raise R2 billion in the space of a few months with earnings-
enhancing portfolio acquisitions falls firmly in line with this strategy."
Peter Sparks, executive director of SA Corporate responsible for investments,
said that because tenants had exercised pre-emptive purchase rights over 12
properties for R87,7 million, the Buffcol portfolio to be acquired had been
reduced and the purchase price revised to R964,5 million. An additional retail
property in East London, valued at R38 million, had been included in the revised
portfolio.
"The properties no longer being purchased are nine Shell service stations and
three Tiger Wheel & Tyre fitment centres which we would have looked to trade out
of the portfolio in view of their generally smaller size in any event," he said.
"The remaining Buffcol properties are large and of a high quality which enhance
the overall quality of SA Corporate. The investments are in sustainable and
growing nodes in the major metropoles or large towns, with an excellent lease
profile and tenancy. They epitomise the investment philosophy of SA Corporate -
long leases with some of South Africa`s leading national retail, industrial and
office tenants with favourable rental growth prospects. "
Sparks said the transaction would re-align the sectoral spread of the fund,
increasing the industrial component to 33% from 28% and reducing the retail
component to 58% from 66%. The office component would be 8%.
"Management is actively pursuing the acquisition of office property to increase
the fund`s weighting in that sector."
ends
Contact:
Craig Ewin
Tel: 031 366 1139\
Cell: 083 441 0530
Date: 20/06/2007 16:08:01 Produced by the JSE SENS Department.
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