Sizafika is forging ahead with its plans to transfer from the ‘Personal Goods’ sub-sector of the JSE Limited to the ‘Financial Services – Real Estate’ sector, which will be pursued after the transfer of the property portfolio, and the company has also announced its intention to enter into a BEE agreement as well as an asset and property management agreement.
“The acquisitions will provide an initial base for Sizafika from which to grow its portfolio while simultaneously yielding sustainable returns and cashflows for investors,” said Sizafika CEO Bryan Smith. “The medium term target is to acquire a R2 billion portfolio.”
The properties have been acquired at an average forward yield of 11.95%, which is forecast to result in an annualised distribution yield of 11% or 33 cents per Sizafika linked unit at the 300 cents issue price. The properties have been valued at a total amount of R589,8 million by Galleon Valuation Services (Pty) Limited, an independent external valuer.
The properties are mostly B- and C-grade commercial buildings, with some A-grade properties, including office, industrial and retail buildings, comprising a total gross lettable area of 310,141m2, of which vacancies total only 3.9%.
In compiling a sectorally well-balanced, geographically diversified property portfolio, 76.1% of the portfolio by value is situated in Gauteng and 14.8% in Kwazulu Natal with the remaining properties located in the Free State, Mpumalanga and the Northern Cape.
The purchase consideration will be discharged by a combination of vendor placement of Sizafika linked units at 300 cents each to institutions and private investors, issue to vendors of linked units and mortgage bonds over the properties.
“Sizafika's objective is to offer growth in income and capital to its linked unitholders over the medium to long term. In doing so, Sizafika will seek further acquisition opportunities which will enhance the quality of the property portfolio as well as provide sustainable growth in distributions to linked unitholders,” explains Smith.
The transaction will increase Sizafika’s net asset value to 264.9 cents per linked unit with 117,368,123 linked units in issue.
The company also announced its intention to provide Indlunkulu Property Investments (Pty) Limited, a private company of which 51% is controlled by a Broad Based Economic Entity led by Connie Nkosi, with the right to acquire up to 20% of the issued linked units in Sizafika at 300 cents per linked unit.
The management of Sizafika and the property portfolio has been outsourced to Ziltrex 77 (Pty) Limited, the directors of which are also directors of Sizafika, and the property management has been subcontracted to Helen Dudley Property Management (Pty) Limited t/a Alchemy Property Management. The management team led by Smith, comprises individuals with substantial experience in the various facets of the property industry.
The proposed acquisitions are subject to various suspensive conditions including the approval by the Competition Commission and Sizafika shareholders. Linked unit-holders currently holding 59% of Sizafika’s linked units have irrevocably undertaken to vote in favour of all the necessary resolutions to give effect to the proposed acquisitions.
The BEE transaction will be implemented in due course once agreements have been concluded.
“Once the proposed transactions become unconditional Sizafika will apply to trade under the Real Estate subsector of the JSE,” explains Smith.
