Business Connexion is getting a cash boost of R379m by selling eight properties to Growthpoint.

The buildings are classified as Grade A commercial properties and are situated in Midrand, Pretoria, Durban, Cape Town and Port Elizabeth.

Business Connexion directors said they decided to sell them because holding property was not the company's core business.

The company will rent the same properties back from Growthpoint for periods ranging from three to 10 years.

The technology company bought the buildings between eight and nine years ago, taking out loans to pay for them.

The deal with Growthpoint will bring in enough cash to pay off those loans and leave R130m in cash to boost the balance sheet. It could also negotiate more commercially efficient rental terms to improve its monthly cash flow.

Growthpoint said it was buying the buildings as it had a policy of investing in quality properties that brought in long-term escalating income streams, and it had negotiated an average rental escalation of 8%.

The acquisition will increase the size of Growthpoint's commercial portfolio from R5bn to R5,4bn. The deal is subject to approval by the JSE, the Securities Regulation Panel and the competition authorities.

Business Connexion shareholders will vote on a far more important issue affecting its future on Monday, when they will be presented with a scheme of arrangement to sell the company in its entirety to Telkom in a deal costing R2,4bn.

Business Connexion shares lost 10c to trade at 818c on Thursday.

Business Day
Publisher: I-Net Bridge
Source: I-Net Bridge