Growthpoint Properties Limited, South Africa’s largest listed property company, is set to benefit from the positive performance and growth of Growthpoint Properties Australia (GOZ).

Growthpoint Properties Limited notified shareholders that Growthpoint Properties Australia (GOZ) had released its results for the year ended 30 June 2010 as well as the details and terms of the acquisition of seven properties for AUD172 million. Growthpoint Properties holds 72,6% of GOZ, a company listed on the Australian Stock Exchange (ASX) trading under the share code GOZ.

Growthpoint Properties CEO, Norbert Sasse, explains that performance of GOZ was in line with market guidance, which is distribution enhancing for Growthpoint. Growthpoint Properties Limited is scheduled to announce its annual results on Wednesday 25 August 2010.

The Australian company’s final distribution of 8,5 AU cents per stapled security for the second half of its financial year resulted in a full year distribution of 14 AU cents per stapled security.

“We are pleased with the performance of GOZ which has a portfolio of well-located property assets throughout Australia which are 100% let with high quality tenants and good lease covenants,” says Sasse.

At the close of the year, GOZ held a portfolio of 25 industrial properties located in five states across the country with some 45% of the portfolio located in Victoria and 21% in Queensland followed by Western Australia, New South Wales and Southern Australia.

Realising its strategy of growing the portfolio, the company also announced the acquisition of a portfolio of seven properties from Brisbane-based developer Property Solutions Group for a purchase consideration of AUD172m, before transaction costs. On conclusion of the transaction, GOZ’s property portfolio will increase to a total of 32 properties.

Sasse explains that the transaction will provide greater portfolio diversification, with the previously exclusively industrial portfolio now gaining office market exposure. It will also provide increased geographic diversification for the Australian portfolio with greater exposure to an attractive Queensland property market.

“The purchase also provides exposure to additional quality tenants and good lease covenants. It will increase GOZ’s asset base and market capitalisation,” notes Sasse.

The seven high-quality Queensland properties comprise two office buildings, a car park, and four industrial properties, all of which are fully occupied with weighted average lease expiry of 6,5 years. The initial income yield of the acquisition is 8,4%.

The company intends to fund the acquisition from debt facilities and from a AUD101m renounceable rights offer. GOZ’s security holders will be offered one new stapled security for every three stapled securities held.

Sasse has indicated that Growthpoint will subscribe for its rights, which equates to a further investment in GOZ of approximately AUD77 million (R508 million) at the offer price of AUD1.90 which represents a discount of 4.7% to the pro forma net tangible assets per stapled security as at 30 June 2010 and a pro forma distribution yield of 9.0% based on FY2011 distribution guidance of 17.0 cents per stapled security. The FY2011 pro forma distribution guidance has been prepared on the basis that the acquisition and Rights Offer both took place on 1 July 2010.

“Depending on investor demand, we will consider renouncing or selling a portion of our rights in the Rights Offer in keeping with our intention to dilute our holding in GOZ to a strategic level over time as the company grows,” says Sasse.

The Rights Offer is anticipated to close on 17 September 2010 and the transaction implemented by 28 September 2010.

“GOZ remains well-positioned to utilise future opportunities to expand its investment in quality office, retail and industrial properties,” says Sasse.

“It is our intention to continue to grow and diversify the company, making it increasingly relevant to Australian institutional investors.”

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