Redefine Properties announced the acquisition of the Leaf Capital portfolio of properties for R4.1bn equating to an initial income yield of 8%, substantially enhancing Redefine’s office portfolio in the Western Cape.
Marc Wainer, Executive Chairman of Redefine Properties comments, “Acquiring this trophy portfolio is a strategic triumph for Redefine. It is underpinned by high-quality income streams from its large, excellently located, premium grade office precinct assets.
“The transaction includes a number of significant properties such as Black River Park and the Wembly Square Development. These assets change the face of our Western Cape portfolio, which will now include the top five percent of quality office blocks in Cape Town.”
In Gauteng, the acquired assets include Bryanston properties Silver Stream Business Park, Silver Point Office Park, Crawford House and Hampton Park. It also comprises Clearwater Office Park in Stubens Valley and Centurion Gate in Centurion.
Leaf Capital is an unlisted company with nine substantial property assets in Gauteng and the Western Cape. The properties are well-located in major metropoles and benefit from strong lease covenants and quality tenants, such as Amazon, Medscheme, Kumba Iron Ore, Dimension Data, and the Green Building Council of SA.
The portfolio is underpinned by strong lease covenants with 37% of the portfolio expiring in more than five years. The fund has maintained a tenant retention ratio of 82% (94% excluding buildings eaermarked for refurbishment) as well as delivering growth in lease renewals of 1.51% at a weighted average escalation rate of 8.1%.
In addition, the portfolio offers future additional development potential as it includes developable bulk at Black River Park, The Boulevard, Silver Stream Business Park and Centurion Gate.
Redefine will pay the purchase consideration through assumed third party debt of approximately R1.9bn, 80% of the balance will be settled through a placement of shares and 20% funded from existing cash resources.
While subject to Competition Commission approval and other conditions, the deal is expected to take commercial effect from 1 March 2015.
Wainer notes, “This strategic transaction advances our strategy to grow a quality, diversified portfolio of properties that support sustainable and growing performance for our investors.”