Ingenuity Property Investments has signed a deal with The Lot 491 Trust and The Hipo Trust to buy the Loerie Centre in George for R40,5m in line with its investment strategy to acquire quality assets.

The fund said yesterday the acquisition would enhance earnings and was an attractive investment. The acquisition would be settled in cash out of borrowing facilities. The acquisition, which was hoped to be completed in September, was subject to board approval.

Based on Ingenuity’s unaudited consolidated interim results for the six months to February, the acquisition was expected to lead to earnings and headline earnings per share increasing about 14% to 0,58c and about 12% to 0,67c respectively.

The fund, which last month posted a drop in earnings and headline earnings per share for the six months to February, had continued to grow its asset base while maintaining a conservative approach to risk management.

Its property assets had grown 42% to R644m, but borrowings had increased to R316m, or 45% of loan to value, after allowing for cash on hand of R24m.

The increase in borrowings was due largely to the funding of its Santam property acquisition and had no significant effect on earnings per share and headline earnings per share for the period under review.

In October last year, the fund acquired Santam Corporate Office Complex in Bellville, Cape Town, for R177,5m. The buildings are fully tenanted by Santam, which had entered into five-year and 10-year triple-net leases with various options to renew.

The fund’s basic earnings per share were down to 1,0c from 3,3c, and headline earnings per share also dropped to 0,6c from 1,0c previously. Profit slipped to R6,6m from R17,8m.

The fund said the main differences between the basic and the headline earnings in this period and that of the comparative period were due to the increases in interest rates and the net profit after tax on disposal of the listed investments held prior to its capital restructure.

The total value of investment properties was R553m from R332m and investment properties under development amounted to R91m from R126m.

The fund’s borrowings increased to R316m from R144m.

Ingenuity is a small fund with a total capital value of R450m and properties under development amounting to R98m.