Boosting its total portfolio value to over 5 billion rand, Corovest International's property fund CIREF has secured 4.1 billion rand worth of acquisitions and developments aimed at bolstering the fund's rapidly growing portfolio.
The acquisitions follow closely on the heels of acquisitions valued at 212 million rand that were announced in September. CIREF, in which South African investors hold the majority stake, listed in May on the London Stock
Exchange's AIM market, said to be the fastest growing junior market in the world.
As a 50% joint venture partner with Modus Properties, CIREF intends to develop a three billion rand (£215 million) mixed-use scheme in Wakefield town centre in South Yorkshire.
The acquisition will further establish CIREF's expertise in retail and mixed-use developments in UK town and city centres. The fund has other similar developments underway in Blackpool, Crewe and Newport.
The 48,000m2 multi-level shopping centre, more than 70 apartments and new indoor market hall with a car park for close on 1,000 cars, should break ground in April next year with completion expected by mid-2010. Leading retail stores Debenhams and Sainsbury's will anchor the shopping centre.
Corovest International CEO Mike Watters says: "The development is set to revitalise Wakefield and establish the town centre as an important strategic shopping destination. It is key to CIREF's growth strategy to continue pursuing developments such as Wakefield to entrench our position as a specialist in retail and mixed-use developments in underutilised town centres in the UK."
A further move saw CIREF buy-out its joint venture partner, Sandcroft Limited, in the portfolio of 29 Kwik-Fit tyre outlets for 32.2 million rand (£2.28 million). Watters says the acquisition is strategic for CIREF as the Kwik-Fit properties, spread across the UK, generate strong rental income streams and provide exposure to properties with attractive asset management opportunity. "We intend to develop the land around the Stockport and Stafford Kwik-Fits, and companies have been set up to manage this."
Making use of its paper, CIREF will settle the purchase price partly in cash and partly in CIREF units at 20 rand (£1.43) a unit. In a separate transaction at the same time CIREF sold the Dundee Kwik-Fit property at a net yield of 4.12%, consolidating the portfolio. The transactions are set to be completed in November.
By the end of October CIREF will also have acquired a one-third stake in The Birchwood Shopping Centre in Warrington, North West England for 710 million rand (£50.15 million) on a reversionary yield of approximately 6%.
The centre is anchored by an ASDA Supermarket and has a strong tenant mix - 80% of income is derived from national chains, 50% of which is secured for over 10 years. A further 9,300m2 expansion is planned shortly, mainly to accommodate a larger ASDA store.
Diversifying its office portfolio and widening its geographical presence, CIREF further acquired a 50% interest in '26 The Esplanade' in Jersey on a net yield of 5.9%. The 383.5 million rand (£27.1 million) purchase price will be funded by Citibank. Three blue chip financial services tenants have been signed on long-term leases in excess of 15 years.
"The tenant make-up and good yield quality of the building makes this a strong acquisition for CIREF. On completion in 2007 the building will provide important diversification in the overall portfolio and complement our retail investments," says CIREF Chairman Gavin Tipper.
CIREF has also invested 21.2 million rand (£1.5 million) in the acquisition of the Four Seasons Health Care Group, as part of a consortium of financiers. Care home real estate forms the backbone of this business with care homes located across the UK. Commenting on this transaction, Tipper says: "Although this is a small investment, it has given CIREF exposure to the growing care home sector of the real estate market, which we believe presents a strong investment opportunity as a result of the ageing demographic profile of the UK".
SA investors make up around 60% of CIREF's shareholding with 18% held by JSE-listed property loan stock Redefine Income Fund. These investors have reaped a 20% capital appreciation since buying in at R16.80 on listing in May, which has taken the trading price to 20.10 rand. The company's market capitalisation now stands at 714 million rand.
CIREF's maiden dividend as a listed company is expected to be paid when it announces annual results in November, following year-end on 30 September.
I-Net Bridge
Publisher: I-Net Bridge
Source: I-Net Bridge
