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Investec fund buys Musina plaza

Investec Property Fund, which listed on the JSE in April, is on the acquisition trail, announcing yesterday, 25 October 2011, that it will buy retail complex Great North Road Plaza in Musina for R145m.

CEO Sam Leon said the fund's stated objective was to enhance the retail component of its portfolio with quality assets, and the acquisition of the Great North Road Plaza met that objective.

It provided an attractive income yield of 9.2%, which would enhance the earnings and growth prospects of the fund.

Investec is buying the retail complex from Swanvest 362 Proprietary Limited and will pay for the asset in cash, which will be funded by debt.

Last month Investec Property Fund acquired two prime commercial properties in Gauteng for R185m.

The fund, which has four retail properties, and seven office and 18 industrial properties, said the Great North Road Plaza consisted of two retail centres on either side of the N1 highway in Musina, 15km south of the Beitbridge border post between SA and Zimbabwe. The total gross lettable area is 13561m².

Leon said Musina was a vibrant commercial and trading centre in the far north of Limpopo, servicing both the surrounding agricultural sector as well as cross-border trade from Zimbabwe.

National tenants and national brand franchises occupy 88% of the space and contribute 83% of the contractual income. The weighted average gross rental for the property is R82,23/m².

As a result of the funding mechanism the proposed transaction was not expected to have a material effect in the first year as it does not contribute more than 3% to the pro-forma distribution per linked unit, earnings per linked unit, headline earnings per linked unit, net asset value per linked unit or tangible net asset value per linked unit of the fund.

The fund says it invests in a well-diversified property portfolio that provides good growth opportunities to optimise and secure long-term distribution and capital growth. When listing the fund, Sam Hackner, chairman of Investec Property Fund, who has more than 30 years' experience in the property industry, said the rationale was simple: "We know the bricks and mortar business very well."

He said the plan was to grow the fund as soon as possible by buying good quality properties where the yield might be diluted in the short term but with growth prospects in the long term.

Over time Investec plans to grow its fund to R10bn in order to be a serious player in the listed property sector.

Source: Business Day


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