SA Corporate concludes Joburg inner city deal

By Alistair Anderson

JSE-listed SA Corporate Property Fund (SAC) on Tuesday said it had concluded a deal to acquire the entire issued share capital of Affordable Housing Company (Afhco) and its portfolio of 27 Johannesburg inner city properties‚ worth about R953m.

The deal value is based on SA Corporate paying Afhco about R278m and taking over R675m debt. SA Corporate would acquire the Afhco share capital from the company’s shareholders‚ consisting of 50% held by the Ideas Managed Fund‚ a policy product of Old Mutual Life Assurance‚ 35.5% by Wayne Plit and 14.5% by Renney Plit.

SA Corporate‚ with market capitalisation of about R8bn at yesterday’s share price of R4.06‚ is working through a turnaround strategy after years of underperformance.

Last month‚ it said this was on track‚ with it increasing distributions 8.6% in the year to December‚ in line with the sector average of about 8.2%.

It said most of the property portfolio consisted of office buildings converted into residential apartments‚ with a ground floor retail element of about 30% by gross leasable area. Its detailed due diligence study on the properties had enhanced the rationale for its purchase.

“Whilst the core rationale for the proposed transaction is to gain exposure to this fast-growing component of the residential property sector‚ this rationale has been further strengthened through potential opportunities to consolidate and further develop existing owned city blocks into precincts‚ which will significantly enhance the existing income producing property portfolio‚” it said.

There were opportunities to expand on the retail offering in the inner city because of the density of the surrounding residential areas and the passing foot count‚ SA Corporate said.

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