07 September 2006

In the largest transaction of its kind in South Africa, Growthpoint Properties Limited today announced the securitization of  a R1.65 billion portion of the Metboard Properties industrial property portfolio.

Growthpoint, managed by Investec Property Group, is South Africa’s largest JSE-listed property holding and investment company, with property assets in excess of R15 billion. The Metboard securitization is Growthpoint’s third issue under its innovative and uniquely-structured commercial mortgage backed securitization (CMBS) programme.

The Metboard issue is listing on the Bond Exchange of South Africa today ( 7 September 2006) and comprises R1 billion of 5-year floating rate notes linked to the 3-month Jibar (Johannesburg Interbank Agreed Rate), a daily South African money market rate. Security for the issue is provided by 103 industrial properties with an open market value of R1.65 billion, with a loan-to-value ratio of approximately 60%.

“The securitization of the Metboard portfolio will result in substantial savings, with our margin of debt being reduced by more than one full percentage point,” notes Growthpoint’s CEO Norbert Sasse.

A further advantage for unit-holders, he points out, is that the costs of the Metboard securitization are minimized by Growthpoint’s use of the existing CMBS structure.

The CMBS programme launched in November 2005 with an initial issue of R805 million. The second issue in June this year was higher at R969 million.

Growthpoint acquired the remaining Metboard units that it didn’t already own in June this year, a move that boosted Growthpoint’s exposure to the industrial property sector - from less than 10%, to its current level of approximately 22%.

Explains Sasse: “Industrial property is poised for good rental growth, as underscored by a low vacancy rate of just 2% across the entire portfolio.”

Growthpoint has been pleased with the success achieved in the previous two issues, notes Sasse. He adds that using securitization to access debt capital is a key part of Growthpoint’s future funding plans.

This transaction brings the total value of properties securitised by Growthpoint to R4,7 billion. We are pleased that the securitisation structure established in 2005 assisted Growthpoint in realising the financial objectives of its unit holders,” says Nick Job, Head of Investec Debt Capital Markets.

A fourth issue is already in the pipeline. Growthpoint intends to bring a further R1.5 billion issue to market in a few months’ time.