In the first property deal of this nature, listed property loan stock company Pangbourne Properties Limited, in collaboration with its empowerment partner Yard Capital, has acquired the entire property portfolio of the Transnet Retirement Funds Property Trust (TRFPT) in a deal that increases Pangbourne’s total market cap to R2.8bn.
“We have been working incredibly hard to lay the foundation for our strategy including the establishment of associated but independent specialist funds. We assisted in the formation of the PROPS commercial mortgaged backed securitisation program with iFour in anticipation of acquiring sufficient critical mass to use the program and reduce our cost of debt. We have also pre-empted the property charter by structuring a partnership with Yard Capital. The TRFPT acquisition in almost every possible way justifies these moves,” says Pangbourne CEO Craig Hutchison.
He adds: “The transaction increases our market cap to R2.8 billion which places the company on the radar screens of a much wider base of institutional investors and improves tradability. The portfolio is yield-enhancing and reduces the average age of our existing porfolio by the acquisition of a number of modern well-located properties that are less than 10 years old. This puts us in to a highly advantageous position in the current industrial property boom in which there is a shortage of this type of quality properties.”
“The TRFP Trust - which holds the property interests of the Transnet Second Defined Benefit Fund, the Transnet Retirement Fund and the Transnet Pension Fund – was looking to convert its directly held properties to property equity to provide the required liquidity for the Funds and to meet their current and future liabilities. It still allows each fund to have their own investment criteria,” says Cheryl Wendelken, Executive at Transnet Pension Fund Administrators. “After a lengthy and thorough process in which we evaluated all the listed property funds with the assistance of an external independent property expert, the Trustees agreed to transact with Pangbourne and its associates as it fulfilled their pre-determined criteria.”
Hutchison comments further: “We offered them an innovative solution which few of our competitors would have been able to match addressing their current income liabilities through a cash component and their future income requirements through an equity component consisting of Pangbourne, Siayathenga and iFour shares.” According to Hutchison, the portfolio is ideally suited to Pangbourne’s specialised fund strategy and enabled Pangbourne to offer the Transnet Pension Funds a spread of risk in terms of the manner in which the purchase consideration is settled.
“The transaction is yield-enhancing because we are able to use scrip and gearing in a favourable interest rate market. In addition we will be able to secure the benefits to be derived in the future through securitisation. By managing the properties ourselves which is part of our core philosophy, we will also be able to improve the lease expiry profile of the portfolio.”
“The process of transformation in the property sector is well underway,” says Leslie Maasdorp, Chairman of Yard Capital, whose executive directors have been involved in this transaction from the outset. “Through this deal, Pangbourne and Yard are proactively increasing capacity building and skills transfer as envisaged in the Charter. This solution can be replicated for parastatal funds and thus it is our strategy to become a core empowerment anchor within Pangbourne. The R125m stake we acquired in Pangbourne two months ago represents the first phase of the empowerment strategy of the company. The transaction structure could be replicated as government moves to utilise its property assets to enable transformation in the property industry and these types of transactions will enable us to further increase our holding in Pangbourne.”
Maasdorp adds: “Acquiring significant interests in key sectors of the economy such as resources, financial services, property and information technology is key to our vision to build a sustainable black empowerment company that visibly contributes to broad based empowerment and transformation. Assisting Pangbourne with this transaction is the start of our strategy to become a significant black empowerment player in the SA property sector.
Issued on behalf of Pangbourne Properties Limited
Contact: Craig Hutchison
Chief Executive Officer
Tel (011) 889 8505 or 083 630 8683
For further information, please contact Corporate Communications Consultants:
Contact: Roz Thomas/Anne Vicente
Tel: (011) 783 8926
15 December 2005
About Pangbourne
Pangbourne was the first property investment company to use the loan stock structure of variable debenture equity financing. The first loan stock company to be listed on the JSE in 1987 with income earning assets of R146 million, it continued to set the pace by taking its property management in-house and also became the first to take over another listed loan stock.
Pangbourne’s vision is to create a property company that can produce sustainable growth in total returns to investors over the long term. This will be achieved in part by capitalising on the management expertise and experience gained over the years by expanding its property management activities.
Pangbourne’s market capitalisation has increased from R250 million in 1998 to the current level of R2.8 billion. Total return to unit holders of 34% per annum over the past 5 years is well ahead of the JSE ALSI. Core to these achievements was the decision to change to own management of the properties, which effectively aligns management’s objectives with those of unit holders.
About Yard Capital
Yard Capital is a black empowerment investment company led by Leslie Maasdorp, co-founder and Chairman of the company. Other principal shareholders of Yard Capital include Irene Charnley, Yogesh Narsing, Lizwi Mtumtum and Lumkile Mondi.
The directors of Yard Capital are prominent black business people in South Africa with a track record of high achievement in business and finance, and have all occupied senior management positions in Government and private sector.
In March 2005 Yard Capital acquired a 30% stake in Fujitsu South Africa, the SA subsidiary of Fujitsu Services Plc, a leading global IT Services and solutions company. In addition, Yard Capital acquired a 6.75% stake, which it acquired in April 2005 as part of a Kagiso-led transaction, in Sani-tech, one of the leading sanitation services company in South Africa.
Publisher: Pangbourne
Source: Pangbourne
