SA’s biggest property firm Growthpoint Properties, is about to take over Tiber Group’s entire real estate portfolio for R6.6 billion in order to expand its commercial property presence. It will be the largest single acquisition for Growthpoint ever. Growthpoint, South Africa’s largest REIT and also in top 40 JSE ALSI listed company, while the Tiber Group is one of the most successful privately owned property development and construction group.
This will give Growthpoint P- and A- grade office space of more than 308 100 square meters and commercial real estate portfolio mostly in Johannesburg northern outskirts along with the Tiber management business - the Johannesburg based company said on Monday. It will also include many multinational head offices such as Nestle, PPC, AngloGold Ashanti, Norton Rose, Merrill Lynch, Barclays and Absa Capital.
Growthpoint will secure their continuity of management and expertise in the transaction. It will internalise the asset management and property management business from Tiber Projects, in turn gaining the skills of 55 full time employees. The company has also secured prior three year strategic agreement with the Tiber Projects executive team of Stephen Scott, Germano Cardoso and Artur Carrazedo.
This transaction will boost up the income flow for Growthpoint. The company further said that “This property transaction represents an opportunity to gain one of the best office property portfolios in South Africa from the location point of view and the scale supported by long term average lease expiries.”
Norbert Sasse, CEO of Growthpoint said that “This kind of portfolio will be one of the best investment property location in SA and its a once in a lifetime opportunity for the Growthpoint shareholder’s and also beneficial for them. Growthpoint will also gain much ability, skills and long term relationships with the occupants of Tiber Group.”
For Tiber Group this deal meets two important goals: one which creates availability for the Tiber shareholders in the market and the other one which will ease the business path in order to provide the best property development, investment and management to the South African property sector.
While Tiber Group’s Stephen Scott says that “We were looking for better shelter for our people with the achievement of the goals and we have done with it by dealing with Growthpoint. We had come across many other alternatives but Growthpoint was the best of them.”
Growthpoint will become the biggest office property owner in the country with 1.5 million square meters of office space across the region pricing around R25 billion. The properties will have an yield of 7.41% in terms of producing income after the real estate asset management fees. Growthpoint will also get 48 000 square meters undeveloped land and also 50% interest in a development project of 19 200 square meter - Bloomberg.
Growthpoint will settle the transaction in the form of cash and shares. It will create other 93.3 million new Growthpoint shares pricing at R27.00/share to increase approx R2.5 billion. The remaining amount will be paid by using the cash resources of the company’s capital raise in May 2013 and other current debt facilities.
