JSE-listed real estate investment trust Growthpoint Properties will provide R908-million towards its subsidiary ASX-listed Growthpoint Properties Australia’s (GOZ’s) acquisition of the Bank of Queensland’s headquarters, in Brisbane.
Growthpoint has a 66% shareholding in GOZ.
GOZ is acquiring the 24 665 m2 A-grade office building, fully occupied by the Bank of Queensland and Collection House. The lease has a weighted average expiry of seven-and-a-half years and a weighted average rent review of 3.9% a year.
GOZ will partially fund the A$250-million acquisition, which has an initial yield of 6.1%, through an equity raising of A$135-million. Growthpoint will provide the balance of around A$89-million, or R908-million.
Growthpoint CEO Norbert Sasse commented that the growth of the company’s offshore holdings is a key driver for Growthpoint.
Australia remains an attractive market relative to South Africa, he added.
“The accretive acquisition is a coup for GOZ in light of the wall of international money competing for direct property assets in the Australian market right now. This deal is remarkable because it adds an extremely high-quality modern asset with excellent covenants in a prime market to the Australian portfolio.”
Growthpoint intends to issue a R1-billion bond on the South African debt capital markets, which it will use, in the main, to finance the transaction.
Sasse confirmed that GOZ is expected to perform well and make a good contribution to Growthpoint’s distribution to shareholders in the current financial year.
Growthpoint first invested in GOZ in 2009, at the same time as the Australian listed property market bottomed out after the financial crisis.
Since then, GOZ’s market capitalisation has grown 50-fold, from A$50-million to about A$2.5-billion, with the support of Growthpoint.