Synergy Income Fund (SIFL) has increased its property assets to R1.7 billion with four significant property portfolio acquisitions in the six months since listing on the JSE with property assets of R280 million.
On Thursday a special general meeting of Synergy linked unitholders approved its acquisition of Gugulethu Square in Cape Town and Setsing Crescent in Phuthaditjhaba, for a total R530 million.
The purchase will be funded by a combination of debt and equity funding, and linked unitholders accordingly agreed to a vendor placement of Synergy linked units.
The acquisitions are still subject to the company placing sufficient Synergy linked units for cash with third party placees in terms of a vendor consideration placing in order to fund up to a maximum of 70% of the purchase price payable in respect of each of the acquisitions.
A specialised retail property fund, Synergy focuses on mid-sized community and small-regional shopping centres.
The property loan stock company listed on the JSE on 14 December last year with three properties spanning 27,000 square metres.
On transfer of its latest acquisition, anticipated in August 2012, its property portfolio will comprise 14 shopping centres covering 177,000sqm.
Meaningful portfolio expansion is driving Synergy's strategy to grow a specialised retail property portfolio anchored by and operated in partnership with the Spar Group.
Its specialised strategy has secured investment from Liberty Group and Regarding Capital Management, Synergy's founding investors.
“Focused specialisation will be a key driver of sustainable investment performance in the SA listed property sector,” said Synergy Income Fund CEO William Brooks.
“These acquisitions reinforce Synergy's specialised retail offering in the listed property sector. We believe that our focus on the lower LSM high growth market will deliver investor value strengthened by strong operational strategies and controls.”
Brooks added that mid-sized commuter centres are usually dominant in rural and township nodes and have a formidable mix of national tenants comparable to premium urban centres.
“Lower income commuter retail assets in these areas offer defensive qualities, solid lease covenants, good growth and robust trading densities,” added Brooks.
Besides improving the overall quality of the Synergy portfolio, these acquisitions have broadened its geographic diversity.
Synergy now holds properties in Gauteng, KwaZulu-Natal, Western Cape, Free State, Mpumalanga, North West and Limpopo.
Brooks noted the investments all meet Synergy's criteria of mid-sized commuter centres in high-growth lower LSM nodes.
“Active management of Synergy's property portfolio, by Synergy's asset managers Capital Land Asset Management and Spire Property Management, will unlock further value,” he added.
Synergy's sights remain firmly set on future growth.
“We continue to focus our attention on value-enhancing growth opportunities presented in the lower LSM retail space,” Brooks concluded. - I-Net Bridge