Gemgrow acquires properties for over R700 milllion

Posted On Monday, 27 August 2018 18:48 Published by
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Gemgrow has acquired, an effective economic interest of 95% in Moolgem, which comprises largely of a retail portfolio, totalling 26 properties in the Limpopo region, for approximately R628m, yielding 11.48%.


Subject to the fulfilment of certain conditions, the acquisition will be effective 1 November 2018. In addition, Gemgrow has also acquired another portfolio of 10 retail properties to the value of R99.9 million at a yield of 12.46%. The two transactions combined increase Gemgrow’s investment in property assets by R728 million.

The Moolgem properties are 85% retail and include prominent retail shopping centres such as Jane Furse Crossing and the Game Centre in Thohoyandou, with the remainder comprising a mix of industrial and office assets.

“The R550m worth of retail acquisitions concluded in the past year and the transactions above demonstrate the Company’s ability to implement sizable acquisitions in line with our objective of growing the fund through yield accretive transactions”, commented Junaid Limalia, CFO of Gemgrow.

The two transactions will be funded by the issue of Gemgrow A shares to the sellers of the respective portfolios to the value of R150m with the balance payable in cash. Upon completion of the two transactions valued at R728m, Gemgrow’s Loan to Value will increase from 29% to 36%. The implementation of the transactions will result in Gemgrow’s retail exposure increasing to approximately a third of the fund, with the office income reducing to around 40%, considerably lower than the 55% when the fund was repositioned on 1 October 2016.

“Since the inception of Gemgrow we have embarked on a process of growing and diversifying the portfolio, which includes an acquisition of R550m of outlying retail assets, strategic disposals of non-core assets and the current R728m purchase of predominantly outlying retail properties. In addition, the dual expertise of Gemgrow and the Moolman Group, through the Moolgem vehicle, will allow us to leverage off future opportunities and ensure we extract further value from our retail assets. Gemgrow continues to demonstrate its ability to grow its portfolio and earnings, while managing to be innovative in a challenging market. We further reiterate that we are on track to meet our guidance for 2018”, concluded Alon Kirkel, COO of Gemgrow.

Last modified on Monday, 27 August 2018 19:07

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