JSE-listed Growthpoint Properties, the largest listed property company, has entered into a deal to acquire a controlling interest in Australia’s Orchard Industrial Property Fund (OIF) for R1,3bn — its first venture offshore.

CEO Norbert Sasse said yesterday the transaction, which would see his group own 60% of OIF, was awaiting the approval of the Australian group’s shareholders in July.

“The decision lies with OIF share- holders, who still have to vote on it. The reason for the delay is the procedure that the Australian Stock Exchange needs to take,” Sasse said.

He said the group would use cash and loan facilities available to fund the transaction.

Growthpoint intends to subscribe for about 348-million new OIF stapled securities in a placement at a price of 16c a unit, for a total consideration of A56m (R367m).

Following this up-front subscription, Growthpoint would have an interest of 50,1% in OIF.

In order to raise the A200m that was required to recapitalise the trust, a rights offer would be undertaken to raise an additional amount of about $A144m (R930m) at 16c per OIF stapled security.

The rights offer would be fully underwritten by Growthpoint for an underwriting fee of 3% and, depending on the percentage of OIF security holders who followed their rights, Growthpoint would own no less than 60% of OIF subsequent to the rights offer. However, its holding could be as high as 78%.

Sasse said the proposed acquisition was considered to be neutral to Growthpoint unitholders in the short term, however it presented an opportunity for the group to acquire control of a listed property company in Australia with excellent assets, underpinned by quality income streams.

The proposed acquisition had no significant effect on the pro forma net asset value, tangible net asset value or distributable income of Growthpoint.

“It is an opportune time to exploit the opportunities that global property markets currently offer and it is our intention to leverage off the secure and stable OIF property portfolio to pursue further acquisition opportunities in Australia,” Sasse said.

The global economic climate had led to a significant demand for new capital required to recapitalise international property companies’ balance sheets to acceptable gearing levels.

These refinancing risks were reflected in the depressed listed property equity prices, which were trading at significant discounts to historic prices and net tangible asset values, Sasse said.

Growthpoint had identified a number of prospects in these markets over the past 12 months but singled out Australia as providing the best opportunity. The Australian real estate sector had been one of the most affected by the global crisis, with the A-Reit trading at a discount of nearly 70% relative to valuations a year ago.