Investec Property Fund (IPF), Investec's recently launched listed property vehicle, intends to acquire two new properties as it grows its portfolio.
The proposed transaction marked the fund's first acquisition since listing in April this year.
"The total value of the transaction will be R185 million, which will be paid in cash and funded initially by way of a bridging loan facility provided by Investec Bank," the company said on Monday.
"As the first acquisition for the fund, these are two attractive properties, in prime locations with strong tenants, which we believe offer good value at an attractive yield, which will enhance the earnings and growth prospects of the fund," Sam Leon, Chief Executive Officer said.
The properties are both located in Gauteng, in strong commercial areas. The first, The Innovation Building, is located in Randburg, and following a recent refurbishment provides 15,000 square metres of quality office accommodation, including parking and storage. It is situated on Bram Fischer Drive, one of the main arteries of the Randburg CBD, in easy reach of the highways and is a landmark building in the area. A ten year lease has been concluded with a tenant.
The second property is the 5,733 square metres Scientific Building, part of the new Cosmo Business Park, just north of the Kya Sands industrial node, with direct access to Malibongwe Drive and in close proximity to Lanseria Airport. The building is home to the Scientific Group who have signed a seven year, triple net lease.
An independent valuation performed on the properties provided a valuation of R194.5 million which was above the purchase consideration, the fund said.
In terms of the unaudited forecast financial performance of the properties over the next 18 months the directors were confident that the proposed transaction would increase the distributions to be paid to the linked unit holders of the fund.
"The fund was established with the purpose of investing in direct real estate where there is potential for income generation and capital growth. These properties fulfill our acquisition criteria with quality tenants in place and will enhance the distribution prospects of the fund going forward," Leon added.
The acquisition was subject to the approval of the unit holders of the fund and this would be sought at a general meeting. - I-Net Bridge
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