19 Sep 2012
Nedbank Corporate Property Finance continues to back retail growth underscoring the bank’s commitment to the listed and retail property sectors.
The bank has funded in part through a R234 million the purchase of two shopping centres by Synergy Income Fund Limited, a Johannesburg Stock Exchange listed property company.
Nedbank partnered with Synergy to purchase King Senzangakhona shopping centre in Ulundi, KwaZulu-Natal and The Setsing Crescent shopping centre in Phuthadijhaba, Free State, explains Richard Thomas, regional executive at Nedbank Corporate Property Finance.
“These acquisitions support the robust growth of the Synergy portfolio to 14 shopping centres with a combined value of R1.7 billion and a gross lettable area (GLA) of 177 000 square metres,” says Thomas.
Modern and well-constructed, King Senzangakhona Centre provides a full retail and service offering: the main linear mall, with line shops and the central Spar anchor, a formal taxi and bus rank, a KFC drive-through, a Game, a fast food offering and a car service centre.
The centre is situated just off the R66, which is the main road running through and into Ulundi, and is highly visible and easily accessible.
The development of the taxi rank has had a positive spin-off in terms of exposure for the line shops that otherwise had limited exposure.
Situated on the main road that runs through Phuthaditjhaba, the centre is accessible and is in one of the dominant regional centres in this growing node.
A high-quality retail centre with national tenants accounting for approximately 95 percent of the occupied gross lettable area, this crescent-shaped mall is anchored by Super Spar and Game and surrounded by line shops with a central pavilion and standalone KFC.
Synergy Income Fund Limited is a specialised retail property fund investing in midsized commuter and small regional shopping centres located in high growth rural and township nodes.
Synergy operates in partnership with leading convenience retailer Spar.
Synergy’s market capitalisation is currently in excess of R1.1 billion following a recent capital raising during August 2012.
In addition to William Brooks as chief executive officer and Uys Meyer as financial director, Synergy’s Board of Directors brings a wealth of experience to the table that includes chairman Martin Kuscus and other board members such as Maurice Mdlolo, chief operating officer for Liberty Properties and Sean Segar, an executive with NedGroup Investments.
Brooks believes specialisation is a key driver of sustainable investment performance in the SA listed property sector.
“These acquisitions reinforce Synergy’s specialised retail position in the sector.
Our focus on the lower LSM high-growth market is positioned to deliver investor value strengthened by strong operational strategies and controls,” says Brooks.
Synergy Income Fund offers investment in its A- and B-linked units, each offering investors a different risk and reward profile.
The A linked units have a preferential entitlement to distributions, with an initial one-year forward distribution yield of 9.4 percent and annual distributions that escalate at 5 percent until 30 June 2017 and thereafter at the lower of 5 percent and CPI.
The remaining distributable income, after the payment of distributions to A-linked unit holders, accrues to B-linked unitholders.
“The average 10 percent yield at which Synergy listed compares favourably to other listings with portfolios of similar quality and size and their portfolio of community and regional shopping centres is set to grow,” says Thomas.
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