SA property fund ups Aussie investment

11 August 2011

JSE-listed Emira Property Fund is investing a further R61.1-million in Growthpoint Properties Australia (Goz), giving it an effective ownership of 8.2% of the units in the Australian-listed real estate investment trust.

Emira made its first investment in Goz in May last year when it acquired 10.25-million units, or 6.4% of the units in issue, at a cost of R116.6-million after being given regulatory permission to invest a portion of its funds abroad.

It subsequently participated in a rights issue in September last year acquiring a further 9.175-million units valued at around R117-million when Goz announced that it was acquiring the properties of company Property Solutions and needed to raise A$101-million to cover the purchase price.

"The transaction is expected to be earnings enhancing for both Goz and Emira unit holders," Emira CEO James Templeton said in a statement this week. "At a forward yield of 9.2%, the pricing of the rights offer is attractive and offers better value that is currently obtainable on physical property investment in South Africa."

Diversifying portfolio, reducing risk

In the latest transaction, Emira has once again followed its rights in a Goz rights issue to fund the purchase of the Australian stock exchange-listed Rabinov Property Trust.

Although the Rabinov portfolio comprises 12 properties, Goz will only be acquiring six of the properties with the remainder being sold back to the Trust's founding family.

The six properties being acquired are high quality properties independently valued at A$184-million. Two of the largest properties are located on the outskirts of Melbourne and are let to General Electric Australia on relatively long leases. The others are also tenanted by blue chip companies.

Templeton said the transaction represented a further meaningful diversification of the assets in the Emira portfolio, adding that the properties being acquired were of high quality and would also help reduce risk within the fund.

Further, the additional investment will boost Goz's market cap to around A$1.2-billion, thereby attracting further interest from institutional investors.

The largest securities holder in Goz is JSE-listed Growthpoint Properties, which is also South Africa's largest listed property fund.

SAinfo reporter