Investec Property Fund makes R1.2bn purchases

Investec Property Fund on Monday edged closer to achieving its aim of reaching a total portfolio value of R10bn within the next five years after announcing three acquisitions collectively worth R1.2bn.

The deals lift the overall portfolio value of the loan stock company‚ which listed only 15 months ago with R1.6bn-worth of assets‚ to R3.5bn.

Sam Leon‚ CEO‚ said the acquisitions would enhance the fund’s retail portfolio‚ which‚ including the transactions‚ had increased seven-fold since the end of the financial year in March.

The fund is acquiring a portfolio of 12 properties for R742.8m from S Giuricich Holdings‚ at a yield of 8.3%. The properties‚ in prime locations in and around Gauteng‚ Polokwane and Bloemfontein‚ have 95% national tenants‚ including Builders Warehouse‚ PG Glass‚ Tiger Wheel and Tyre‚ McCarthy Volkswagen‚ Nissan‚ Honda‚ Ellerines and Wetherleys.

The fund is also buying the MegaMark Mall in Kriel‚ Mpumalanga‚ from Ivory Pewter Trading 18 for R218m.

Leon said the fund was achieving what it had set out to do at the time of its listing.

“We said we would grow the scale of the portfolio through solid acquisitions‚ and we are comfortable with that‚” he said. “All the acquisitions we have done since listing have been through relationships we have built over the years due to our track record.”

He said the fund was not just “bulking up”‚ but also building a niche office portfolio.

“Looking at all the acquisitions we have made so far‚ we are comfortable with the fundamentals in these assets. Most of the acquisitions are not multitenanted but have single tenants with long leases‚” Leon said.

Since the financial year-end in March and including the latest acquisitions‚ the fund’s total portfolio has increased 71% in value‚ from R2bn to R3.5bn.

Leon said the retail portfolio had increased its value 700% to R1.5bn‚ from R185m at the time of listing.

“A key objective at this stage is to grow our asset base to maximise economies of scale‚ create a portfolio effect to mitigate risk and to position the fund to effectively compete for acquisition opportunities‚” he said.

“These are high-quality acquisitions that have come about thanks to the team’s longstanding relationships‚ experience and entrepreneurial property skills‚” he added. “Importantly‚ they enhance scale‚ thereby enabling the fund to be more competitive while significantly improving the portfolio effect‚ which mitigates risk‚ especially given the quality tenant profile of the acquisitions.”

Leon said a trophy asset for the fund was the acquisition of The Firs shopping centre in Rosebank‚ Johannesburg‚ from Investec Property for R272m‚ with an attractive initial return of 8.75%.

He said the acquisition would be funded through a combination of equity and debt‚ and as Rosebank was one of Gauteng’s most powerful emerging economic nodes‚ it would boost earnings over time.