Sycom buys abroad due to local shortage

Posted On Thursday, 16 August 2007 02:00 Published by Commercial Property News
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Listed property unit trust Sycom Property Fund said yesterday it had acquired a 22,5% interest in an offshore property fund for R257,5m

Paul TheodosiouSycom, which has a market capitalisation of R3,5bn and property assets worth about R4bn, said the acquisition was part of a long-term strategy to increase its exposure with offshore investments by partnering with experts in other countries.

Sycom is the second listed property fund to take an investment in an offshore property fund. Redefine Income Fund already owns an 18% interest in UK-based Ciref.

Sycom said yesterday it had subscribed for 22,5% in the issue capital of the Stenham European Shopping Centre Fund on July 18 this year following capital raising undertaken by the fund.

The fund is listed on the Channel Island Stock Exchange, and holds as its only asset 100% of its subsidiary Prejan Enterprises, which in turn holds as its only asset a regional shopping centre situated between Leipzig and Halle in Germany. The shopping centre is called Nova Eventis and is 96000m².

Sycom said another reason for looking offshore was that there was a shortage of quality stock of this size in SA.

The company said it would be issuing units to pay for the transaction.

Keillen Ndlovu, a listed property analyst at Stanlib, said yesterday there were no quality retail properties available in the local market at the moment and that Sycom was “compelled to take the offshore route”.

“Though the yield is not attractive in relative terms, a regional mall of this size and nature further adds to the quality of Sycom’s portfolio,” said Ndlovu.

Redefine was the first South African listed property company to explore offshore listed property investment.

Vuyani Bekwa, head of institutional business at Investec Listed Property Investments, said yesterday one of the group’s concerns was that Sycom would be issuing units at a forward yield of 7,2% and receiving income of roughly 3% to 4%, and that this would dilute yield .

Bekwa said German retail spending was also questionable.

“There is a weak German spending trend at the moment. Economic growth in Germany is weak.” Bekwa said rand volatility could also affect future income to be received by Sycom.

In May last year, Corovest International, the British property arm of South African-based Coronation Investments and Trading, listed its property fund, CIREF, on London’s Alternative Investment Market.

Last modified on Wednesday, 23 April 2014 17:59

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