Primegro buys Richway

Posted On Monday, 14 January 2002 03:01 Published by eProp Commercial Property News
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Listed property group Primegro has finalized an agreement to acquire the retail property portfolio of Richway for 1.175 billion rand in one of the country's biggest property deals, the company announced on Friday. The transfers are expected to be registered immediately in Primegro's favor, excluding Long Beach, bringing the value of its property portfolio to 2.34 billion rand.

Derek Greenberg and Panico TheocharidesPrimegro said it had also purchased three prime office buildings from IPD group: 24 Peter Place in Sandton, with five-year leases; the LTA building in Sunninghill with a five-year lease from LTA Process Engineering; and Vinimark Building in Linbro Park which has a four-year lease with Vinimark. This would raise the value of Primegro's portfolio further, to 2.39 million rand.

The company had placed 307 million rand in deferred linked units to fund the Richway deal and partially fund the IPD acquisition, it said. At the same time, with the approval of shareholders and debenture holders, it was proposing to issuing 5.096 million more deferred linked units to two financial institutions for cash at an issue price of 6.20 rand per deferred linked unit.

The resultant larger market capitalisation is intended to make Primegro's linked units more liquid, tradable and attractive to investors, explained joint MD's Derek Greenberg and Martin Ettin.

'Primegro is fortunate to have acquired Richway's high-grade regional centres of Brooklyn, Walmer, Northgate (50%), Kolonnade (50%) and Long Beach (50.1%) which are expected to deliver a sustainable income stream to drive its unique financial structure and deliver exciting yields to investors.

'In a market where securitization of income streams is the name of the game, dominant and regional shopping centers are a precious commodity and Primegro has done well to acquire these centers at such attractive yields,' they said.

Although property sector yields had come off their peaks of above 20%, they were still very attractive at around 13% compared to bond yields of about 10%. New listings - authoritatively estimated at between 10 and 15 - were set to push the sector's market capitalization to new heights in the new year. Primegro, which listed in November 1999, had already exceeded its pre-listing primary objective to establish a portfolio of quality, well-positioned income producing properties with a value of more than 2.0 billion rand.

The company's strategic acquisition policy saw it buy nine properties in November last year for 436 million rand, another four properties in July for 47 million rand, followed by the Richway deal.

The acquisitions were calculated to supply a secure long-term income stream for Primegro.

Last modified on Tuesday, 29 April 2014 10:56

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