Growthpoint buys 17 properties

By Nick Hedley

Listed property giant Growthpoint Properties (GRT) said on Wednesday it would acquire a portfolio of 17 quality office properties in northern Johannesburg and Woodmead for R1.33bn.

Analysts have speculated that Growthpoint’s two capital raises in the past four months — in which it raised a combined R3.5bn in new equity — suggested SA’s largest listed property company could be eyeing large acquisition opportunities.

The company said it would acquire Abseq Properties‚ which owns and manages the 17-property office portfolio‚ at an average forward yield of 8.74%. The purchase consideration would be settled in shares and cash.

The portfolio comprises 79‚971m² of predominantly A-grade offices.

While data continues to point towards a weak office environment in SA — where vacancies are high and pressure on rentals remains — high-quality office space which is well located is generally seen as the exception to what is otherwise the worst-performing commercial property sector.

Growthpoint CEO Norbert Sasse said on Wednesday that the transaction was yield-enhancing for the company.

“This is a sizeable portfolio of quality properties in locations which are strategic and complement Growthpoint’s existing portfolio.”

Sasse said the deal would increase Growthpoint’s exposure to the Woodmead office node‚ where more than half of the Abseq portfolio space is located.

The acquisition also includes the Equity Estates property management team responsible for managing the Abseq properties.

Abseq’s portfolio includes four office parks — including the 25‚000m² Country Club Estate in Woodmead‚ the 18‚500m² Woodmead Estate‚ the 9‚900m² Illovo Corner and the 8‚300m² Peter Place Office Park in Bryanston.

The portfolio also includes Equity House and the British Consulate in Dunkeld West‚ four properties in Chislehurston‚ as well as three properties and a 50% stake in a further four properties in Houghton.

The transaction‚ which is subject to various conditions‚ is expected to be effective in the first quarter of 2014.

Growthpoint said the acquisition would boost the value of its consolidated tangible assets to more than R64bn.

Growthpoint executive director Estienne de Klerk said last week that while the past two equity raises had reduced Growthpoint’s gearing‚ the conclusion of potential deals over coming months would see gearing rise again.

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