JSE listed company, Emira Property Fund has increased its investment in Growthpoint Properties Australia (Goz) an Australian listed property Reit.
Emira increased its investment by R61.1 million and will effectively own 8.2 percent of the units in Goz (23.8 million of the total number of units in issue).
The company made its first investment in Goz in May 2010 when it acquired 10.25million units or 6.4 percent of the units in issue at a cost of R116.6 million after being given regulatory permission to invest a portion of its funds abroad.
Asked what this means for investors, James Templeton, chief executive officer of Emira says the Emira portfolio is now further diversified in terms of its asset, tenant and currency base which reduces the risk to investors.
“The prospects are that Goz is offering a great yield in Australian Dollar with growth in that yield which will enhance the yield and growth prospects for Emira investors,” says Templeton.
He says the local market is currently tough with rentals under pressure and costs rising in excess of revenue and growth in distributions will be slowing down.
Emira participated in a rights issue in September 2010 acquiring a further 9.175million units valued at around R117million when Goz announced that it was acquiring the properties of property company, Property Solutions, and needed to raise A$101m to cover the purchase price.
In the latest transaction, Emira followed its rights in a Goz rights issue to fund the purchase of the Australian stock exchange-listed Rabinov Property Trust, which comprises a portfolio of 12 properties.
Office: Spoor & Fisher (Building 11), Highgrove Office Park in Centurion.
Goz will only acquire six of the properties and the remainder will be sold back to the Trust’s founding family.
The six properties being acquired are high quality properties with an average age of 7 years and average yield of 8.8 percent. They have been independently valued at A$184millon. Two of the largest properties are located on the outskirts of Melbourne and are let to General Electric Australia on relatively long leases and others have blue chip companies as tenants.
Subsequent to the issue of Goz units to Rabinov unitholders, Goz raised A$102.6m via the issue of 54.0million units at a price of 190 cents. Goz unit holders were entitled to 22.7 new Goz units for every 100 Goz units held. The rights offer was underwritten by Growthpoint South Africa and the cash received will be used to pay down debt in the Rabinov portfolio.
Emira was consequently entitled to subscribe for 4.4m new Goz units at a price of A$1.90 each equating to R61.1million at a R/A$ exchange rate of R7.28/A$. Emira raised the money for the investment via a combination of the sale of selected property assets and the use of existing facilities.
“The transaction is expected to be earnings enhancing for both Goz and Emira unit holders. At a forward yield of 9.2% the pricing of the rights offer is attractive and offers better value that is currently obtainable on physical property investment in South Africa.”
Emira’s portfolio consists of 47 percent offices, 36 percent retail and 17 percent industrial in Durban, Pretoria, Johannesburg, Cape Town, Bloemfontein and Bloemfontein. Some of its retail properties include, Boskruin Shopping Centre in Bromhof, Johannesburg, Epsom Downs Shopping Centre in Bryanston, Gateway in Hatfield Pretoria and Kokstad Shopping Centre among others. – Denise Mhlanga
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