Investec Property Fund increases stake in Investec Argo UK Property Fund

Posted On Tuesday, 09 July 2019 12:21 Published by
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Investec Property Fund (IPF) has acquired an additional 23% interest in the Investec Argo Property Fund (UK Fund) for GBP25 million, increasing its shareholding to 33% and its total investment in the UK Fund to GBP36.7 million.

 -ANDREW-WOOLER-

The acquisition will be part-funded through the proceeds received from the partial sell down of IPF’s holding in the Investec Australia Property Fund, and forms part of IPF’s capital recycling strategy.

“This allowed us to realise the opportunity to scale up our investment in an established international platform that has delivered a compelling IRR of 15.8% since inception despite local market volatility and, is managed by partners we trust,” said Andrew Wooler, Joint-CEO, Investec Property Fund. 

Furthermore, given the intended funding structure, the investment is expected to be earnings accretive in the short-term.

“The acquisition is expected to generate a post-withholding tax initial yield of c.5.5% in GBP and reflects a discount to net asset value of 14% - providing an attractive enhancement to the IPF’s entry point into the United Kingdom,” added Wooler.

Underpinned by sound property fundamentals and a quality tenant base, including several long-dated Sainsbury’s stores, the UK Fund’s property portfolio has a WALE of 11 years and vacancy of 2.2% (excluding development vacancy).  In addition to the core income properties, the portfolio includes core-plus properties in the industrial sector that provide potential future upside through rental growth and active asset management initiatives.

The UK Fund will continue to build its portfolio on a similar basis, targeting annualised total returns of approximately 10% through the acquisition and management of both core and core-plus properties.

“This acquisition further enhances our balance sheet diversification, increasing IPF’s total offshore exposure to approximately 17% and strengthening the optionality of our portfolio in line with the intent to grow offshore contributions. This, in addition to our high quality South African asset base, positions the IPF optimally to deliver on our objective to optimise capital and income returns over time for shareholders,” said Wooler.

Last modified on Tuesday, 09 July 2019 12:33
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