THE lead empowerment partner of listed property loan stock Pangbourne Properties has acquired a further 4,5% stake in the company for R170m.
The transaction, which was concluded on Thursday, brings empowerment partner Yard Capital’s equity ownership in Pangbourne to just under 10%.
Pangbourne CEO Craig Hutchison said on Friday that Yard Capital had acquired the further 4,5% from Transnet Second Defined Benefit Fund. The Transnet fund had owned a stake in Pangbourne since the acquisition of a R1,4bn property portfolio from the fund by Pangbourne.
In terms of the portfolio transaction, Pangbourne had paid for the portfolio by the issue of 50% cash and 50% units. Pangbourne took transfer of the Transnet fund properties on April 1 last year.
Hutchison said Pangbourne was “busy working on various structures to increase the empowerment stake with additional empowerment partners”.
He said the company was aiming to have 20% of the company voting rights in empowerment hands within a year.
The property sector empowerment charter, which was signed in March last year, aims to place 25% of the South African property sector in black hands in five years. “We still have a lot of time to do our deals,” said Hutchison.
But with listed property prices increasing over the past few years it is becoming expensive to conclude empowerment deals.
“As property yields compress it’s going to be more difficult to conclude empowerment deals. While we have structures that work, let’s do the deals now,” said Hutchison. Yard Capital concluded its first deal with Pangbourne in October 2005 in a R125m transaction.
Yard Capital’s initial 5,3% interest in Pangbourne was acquired on the back of a property portfolio transaction.
At the time Pangbourne issued linked units for the deal and Yard Capital received funding from banks with a backing of securities by Pangbourne.
“The deal was concluded back to back with an acquisition of a property portfolio. At that stage we were acquiring R125m worth of properties and we issued the units to pay for them. Yard Capital bought the units and got funding from banks,” said Hutchison.
Since then the listed property sector prices “have increased substantially”, making it expensive to conclude empowerment deals. Yard Capital had “built up equity” from the initial transaction because of the unit price increases.
