CAPE TOWN – Tower Property Fund’’s share price shot up 7.34 percent after an update announcing the sale of its Medscheme office property, where the lease was recently renewed for seven years for R97.5 million. This was in contrast to the FTSE/JSE Reits index, which was down 0.73 percent.
The transaction equated to a 9.8 percent selling capitalisation rate. As at May 31, the property fund had a book value of R103m, a statement said on Tuesday.
About 31 percent of the revenue from Tower’s R5.2 billion property portfolio is generated from properties in Gauteng, 24 percent in Croatia, 37 percent in Western Cape and 8 percent in KwaZulu-Natal.
Tower’s like-for-like loan to value ratio will fall to 31.6 percent compared with 34.1 percent for the year ending May 31, 2019, following the sale of the Medscheme property and the recently announced disposal of the Meadowbrook property.
Part of Tower’s strategy is to sell non-core and lower growth properties, which it believes to have reached full value, so that it can realise capital for reinvestment in the existing portfolio and other growth assets.