Growthpoint expands in Australia
18 May 2009
South Africa's largest listed property company, Growthpoint Properties, has made its first venture offshore, acquiring a majority stake in Australia's Orchard Industrial Property Fund (OIF) for approximately A$200-million (about R1.3-billion).
OIF is a property trust listed on the Australian Stock Exchange, with investments in logistics warehouses in Queensland, New South Wales, South Australia, Victoria and Western Australia. It has a current market capitalisation of A$52-million, and a property portfolio valued at A$744-million as of December 2008.
Growthpoint explained that while the deal was considered to be neutral to unit-holders in the short term, it presented an opportunity for Growthpoint to acquire control of a listed property company in Australia with excellent assets, underpinned by quality income streams.
The proposed acquisition would also have no significant effect on the pro forma net asset value, tangible net asset value or distributable income of Growthpoint.
"It is an opportune time to exploit the opportunities that global property markets currently offer, and it is our intention to leverage off the secure and stable OIF property portfolio to pursue further acquisition opportunities in Australia," Growthpoint CEO Norbert Sasse said in a statement this week.
Demand for new capital
The current global economic climate had led to a significant demand for new capital to recapitalise international property companies' balance sheets to acceptable gearing levels, the company said, adding that the refinancing risks were reflected in depressed listed property equity prices.
Growthpoint identified a number of prospects in these markets over the past 12 months, but has singled out Australia as providing the best opportunity.
"We tracked a number of opportunities in the country over the past 12 months, and identified OIF as the most suitable investment based on its tenants with strong covenants, which provide Growthpoint with a stable and secure platform to establish a foothold in Australia," Sasse said.
The agreement further provides for the integration of OIF's management and the change of the fund's name to Growthpoint Properties Australia.
SAinfo reporter
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