PRETORIA – Listed Growthpoint Properties has made a further R908 million investment in Australia to continue its international growth and intends to issue a R1bn bond on the local debt capital markets to finance the transaction.
Growthpoint, which has a 66 percent shareholding in Australian Stock Exchange listed Growthpoint Properties Australia (GOZ), plans to follow its full rights in the funding call from GOZ for the A$250 million (R2.52 billion) acquisition of the Bank of Queensland headquarters in Brisbane.
GOZ will partially fund the acquisition through an equity raising of A$135m, with Growthpoint taking up its full entitlement of about A$89m or R897.5m.
Norbert Sasse, the group chief executive of Growthpoint, said yesterday that the increase of Growthpoint’s offshore holdings was the key driver for the company.
“Australia remains an attractive market for us, relative to South Africa, and supporting GOZ’s major acquisition further diversifies Growthpoint offshore,” he said.
Sasse said the accretive acquisition was a coup for GOZ in light of the wall of international money competing for direct property assets in the Australian market right now.
“This deal is remarkable, because it adds an extremely high-quality modern asset with excellent covenants in a prime market to the Australian portfolio,” he said.
The 24665m² A-grade office building has been acquired at an initial yield of 6.1percent.
Completed in 2014, it has green and energy efficient credentials, was fully occupied by the Bank of Queensland and Collection House, with a weighted average lease expiry of 7.5 years and a weighted average rent review of 3.9 percent a year.
Sasse said that GOZ was expected to do well and make a good contribution to Growthpoint’s distribution to shareholders during this financial year, with providing growth guidance of A$0.23 a share for its 2019 financial year.
He said that Growthpoint had also taken advantage of the weaker rand in recent months to ensure that its distributions were well hedged, with the contribution that GOZ makes to Growthpoint’s distributions now rebased to include maximum withholding tax.
Growthpoint, the largest South African primary listed real estate investment trust, owns 57 properties in Australia through GOZ.
It first invested in GOZ in 2009.
Growthpoint’s total diversified portfolio comprises 512 property assets, including 454 in South Africa and a 50percent interest in the properties at V&A Waterfront.
Shares in Growthpoint dropped 0.46percent on the JSE on Wednesday to close at R24.04.