Tradehold grows local foot print with Collins SA deal

Posted On Tuesday, 07 June 2016 17:39 Published by
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Property hybrid Tradehold makes a big play for local property by acquiring the R6.2bn South African portfolio of the Collins Property Group.

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Cape Town — Property hybrid Tradehold, which boasts retail tycoon Christo Wiese as a major shareholder, made a big play for local property by acquiring the R6.2bn South African portfolio of the Collins Property Group.

The deal adds another dimension to Tradehold, which is focused mainly on UK real estate, but also holds African property development interests, specialised financial services in the UK and SA, as well as solar power solutions.

This is the second deal that Tradehold has struck with Collins. In March 2015, Tradehold acquired Collins’s UK and African portfolios for £28.2m.

The new deal effectively means the Collins group now functions as a wholly owned subsidiary of Tradehold.

Tradehold is not widely followed by institutional investors. The deal elevates Tradehold into one of the more significant midtier property listings on the JSE — although wider investor interest could by stymied by a lack of share liquidity.

One of the market watchers canvassed about the deal noted that Wiese — via Luna Group — also held a significant minority stake in Texton Property, which owns real estate in SA and the UK. He asked whether Texton — with a market capitalisation of R3.1bn — could be a target for an acquisitive Tradehold.

Tradehold and Texton already enjoy a close relationship through their involvement in a R1.4bn joint venture to develop the Broad Street Mall in Reading in the UK. Tradehold CEO Friedrich Esterhuyse said the R1.8bn net equity value of the Collins’s portfolio would push the company’s market capitalisation close to the R8bn mark.

“The deal allows us to bulk up significantly. We will have a bigger balance sheet to grow our assets locally and offshore.”

The purchase price — calculated by using a net operating income yield of 9.45% — will be settled mostly by the issue of new Tradehold shares and a small portion of cash. The transaction sees Tradehold’s net asset value increasing by R1.8bn to R5.3bn, with the Collins group’s domestic portfolio comprising 34% of that figure.

The Collins portfolio comprises 136 commercial, industrial and retail property assets, with a combined gross lettable area of 1.2-million square metres in 295 buildings. The largest component consists of industrial buildings (67%) followed by distribution centres (20%). The tenant profile is 70% national tenants with a vacancy rate of 5.%.

Tradehold chairman Wiese said the senior staff of the Collins group would continue to manage the South African portfolio under the Collins name. He emphasised that Tradehold’s main focus would continue to be the UK. “The UK is still the biggest component of our business on a net asset basis, while growing in Africa remains on our list of priorities.”

In a recent investment presentation, Esterhuyse said the financial year ahead would be a “big year” for the UK business — noting further proposed retail and central London office acquisitions, as well as future partnering opportunities to expand the UK portfolio further.

Source: Business Day

Last modified on Friday, 24 June 2016 01:21

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