South African listed property company, Growthpoint Properties Limited, recently notified shareholders that Growthpoint Properties Australia (GOZ) had released its results for the year ended June 30 as well as the details and terms of the acquisition of seven properties for AU$172 million.
Growthpoint Properties holds 76.2% of GOZ, a company listed on the Australian Stock Exchange (ASX) trading under the share code GOZ.
Growthpoint Properties chief executive, Norbert Sasse, said performance of GOZ was in line with market guidance, which enhances Growthpoint’s distribution. The company exceeded its distribution forecast for the year ended June 30, achieving distribution growth of 5.8%.
The Australian company’s final distribution of 8.5 AU cents a stapled security for the second half of its financial year resulted in a full year distribution of 14.0 AU cents a stapled security.
“We are pleased with the performance of GOZ, which has a portfolio of well-located property assets throughout Australia that are 100% let with high quality tenants and good lease covenants,” said Sasse.
At the close of the year, GOZ held a portfolio of 25 industrial properties in five states across the country with about 45% of the portfolio in Victoria and 21% in Queensland, followed by Western Australia, New South Wales and Southern Australia.
Realising its strategy of growing the portfolio, the company also announced the acquisition of a portfolio of seven properties from Brisbane-based developer Property Solutions Group, for a consideration of AU$172 million, before transaction costs. On conclusion of the transaction, GOZ’s property portfolio will increase to a total of 32 properties.
Sasse said the transaction would provide greater portfolio diversification, with the previously exclusively industrial portfolio gaining office market exposure. It would also provide increased geographic diversification for the Australian portfolio with greater exposure to an attractive Queensland property market.
“The purchase also provides exposure to additional quality tenants and good lease covenants. It will increase GOZ’s asset base and market capitalisation,” said Sasse.
The seven high-quality Queensland properties comprise two office buildings, a car park, and four industrial properties, all of which are occupied with weighted average lease expiry of 6.5 years. The initial income yield of the acquisition is 8.4%.
The company intends to fund the acquisition from debt facilities and from a AU$101 million renounceable rights offer. GOZ’s security holders will be offered one new stapled security for every three stapled securities held.
Sasse has indicated that Growthpoint will subscribe for its rights, which equates to a further investment in GOZ of approximately AU$77 million (R508 million) at the offer price of AU$1.90 which represents a discount of 4.7% to the pro forma net tangible assets a stapled security as at June 30 and a pro forma distribution yield of 9.0% based on FY2011 distribution guidance of 17.0 cents a stapled security.
The FY2011 pro forma distribution guidance has been prepared on the basis that the acquisition and rights offer both took place on July 1 2010.
“Depending on investor demand, we will consider renouncing or selling a portion of our rights in the rights offer in keeping with our intention to dilute our holding in GOZ to a strategic level over time as the company grows,” said Sasse.
The rights offer is expected to close on September 17 and the transaction implemented by September 28.
“GOZ remains well positioned to utilise future opportunities to expand its investment in quality office, retail and industrial properties,” said Sasse. “It is our intention to continue to grow and diversify the company, making it increasingly relevant to Australian institutional investors.”