Finance: Growthpoint Properties Completes Australian Acquisition
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Growthpoint Properties Limited now owns 76.2% of Growthpoint Properties Australia following the completion of this acquisition which is Growthpoint’s first venture offshore and represents an investment of approximately R1,3 billion at current exchange rates.
The company has also successfully raised R1.8 billion locally through a substantially oversubscribed vendor placement, on the back of its successful Australian transaction, as well as the acceptance of its new distribution re-investment option by a substantial majority of its linked unitholders.
Growthpoint, a leading JSE ALSI 40 listed company, is the largest South African listed property company with assets exceeding R29.1 billion and a market capitalisation of over R19 billion.
The second phase of the Australian transaction, a rights offer to Growthpoint Australia’s investors underwritten by Growthpoint Properties, has now been wrapped up with few existing shareholders following their rights, and raising $A5.5million.
“We are pleased with the outcome. Growthpoint Australia is now on a solid footing having benefitted from a A$200 million injection to settle debt and borrowings,” says Norbert Sasse, CEO of Growthpoint Properties Limited.
Growthpoint Australia’s share price closed above the offer price of $A1.60 at $A1.64 for the first time on Thursday, 17 September. The projected yield of Growthpoint Properties post consolidation remains over 9% in Australian Dollars.
The R1.8 billion capital raised will add flexibility to the company’s future refinancing of debt, while access to capital positions Growthpoint to pursue opportunities to meet its stated strategic objective of growing its portfolio, both locally and internationally.
“Initially we intended to raise some R989 million. However, on conclusion of the book-build, investment interest was in excess of R2.3 billion,” explains Sasse. Resulting from this robust demand, Growthpoint raised the vendor placement amount to R1.26 billion.
“We are extremely pleased with the success of the vendor placement,” says Sasse who emphasises the considerable investor interest by noting that the company’s major investor, PIC (29.1%), did not participate in the placement.
Further expressing confidence in Growthpoint’s performance, over 65% of its linked unitholders elected to re-invest their distributions of 58.3 cents per unit, raising a further R540 million.
This re-investment option -- a first-ever for a South African listed property company -- was announced by Growthpoint in August 2009, providing unitholders a distribution re-investment alternative whereby unitholders may elect to receive new Growthpoint units to the value of their distributions.
“The capital raised through these two avenues will assist Growthpoint in strategically refinancing debt coming up in the next few years,” says Sasse. He points particularly to debt currently funded through commercial mortgage backed securitisation (CMBS). “Pricing in the debt capital markets is not conducive in the current economy and we will probably consider conventional debt in this market.”
Growthpoint has also indicated that it is actively seeking quality acquisitions that will grow its South African portfolio of properties as well as diversify its pure industrial Australian portfolio with retail and office assets.
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