Pangbourne likely to hit earnings of Capital fund

Posted On Monday, 06 December 2010 02:00 Published by eProp Commercial Property News
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Capital Property Fund’s planned acquisition of Pangbourne Properties is expected to see earnings drop 20,87% to 29,66c for the six months to June.

Kundayi MunzaraListed property unit trust Capital Property Fund’s planned acquisition of property loan stock company Pangbourne Properties is expected to see headline earnings per share drop 20,87% to 29,66c for the six months to June.

Capital last week announced its intention to acquire all Pangbournelinked units in issue that it does not already hold, which would result in it becoming the third-largest South African -listed property fund, with a market capitalisation of R14,9bn.

Capital said it expected distributions per unit to decrease 3,60% to 28,36c, while earnings per share were anticipated to slip 23,97% to 30,58c as a result of the planned acquisition. Net asset value per unit was expected to decrease 10,81% to R6,57 from R7,28 previously.

Capital said the benefits of the deal include economies of scale, a market-appropriate gearing level for the combined portfolio and improved liquidity for unitholders.

Capital is offering Pangbourne unitholders a ratio of 2,38 Capital units per Pangbourne unit. Any Pangbourne unitholder to receive in aggregate 1190 Capital units or fewer would have the choice of a cash consideration of R20 per Pangbourne-linked unit instead.

Investec Property’s head of research, Kundayi Munzara, said the swap ratio implied a 1% premium to the Pangbourne closing price on Friday.

He said the deal was likely to be yield-enhancing for Capital unitholders. While the premium is modest, Pangbourne unitholders may benefit from exposure to Capital’s portfolio.

“We expect cost synergies to be minimal as Pangbourne and Capital directors operate under one roof and they have worked hard to remove cost inefficiencies within the group over the years,” he said.

Capital plans to become a specialised commercial and industrial fund, owning only A-grade properties in the four major metropolitan areas of Cape Town, Durban, Johannesburg and Pretoria.

The fund aims to exit the retail sector and focus on the commercial and industrial sector, eyeing well- located A-grade buildings.

Last modified on Monday, 21 April 2014 10:05

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