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Tuesday Nov 19, 2013

Growthpoint becomes SAs biggest office property owner

Growthpoint has acquired the entire property portfolio and management business of the Tiber Group for R6.6 billion in the listed property fund's single largest transaction.

The Towers in Sandton are part of the property portfolio being aquired by Growthpint.

It will make Growthpoint the biggest office property owner in South Africa with a portfolio of 1.5 million square metres of office space valued at about R25bn.

The portfolio, developed under the vision of the late Francesco Rivera, spans 320 000m of mainly premium and A-grade office space concentrated in Sandton and its surrounds.

It comprises 28 prime properties, a 50 percent stake in a further nine and 48 000m of undeveloped bulk. It includes multiple multinational head offices, such as Nestlé, PPC, AngloGold Ashanti, Norton Rose, Merrill Lynch, Barclays and Absa Capital.

Norbert Sasse, the chief executive, said yesterday that a portfolio of this quality and size, centred in arguably the best investment property location in the country, was a oncein-a-lifetime opportunity and beneficial to shareholders.

He said with its R1.3bn acquisition last month of Abseq Properties' portfolio, it would increase the value of Growthpoint's portfolio to R68bn.

Growthpoint will internalise the asset and property management business from Tiber Projects but secure continuity of management and expertise from the skills of 55 full-time employees at Tiber.

It has also secured an initial three-year strategic agreement with Tiber's executive team of Stephen Scott, Germano Cardoso and Artur Carrazedo.

Sasse said the trio were the group's development arm, with 30 years' expertise and experience with the group as well as strong relationships with the tenants and previous employees that Growthpoint would be taking on.

He said they would help to ensure the Tiber portfolio was integrated with Growthpoint's portfolio as optimally as possible while Growthpoint would also leverage their skills, insight and knowledge to develop the undeveloped bulk and ensure a continued stream of developments for Growthpoint.

As part of the agreement, Growthpoint will also have continued access to Tiber Bonvec Construction's development and construction expertise for the undeveloped bulk and redevelopment opportunities for the portfolio.

Sasse said the transaction met two important goals for the Tiber Group by creating liquidity for its shareholders and unlocking the next phase of its business by facilitating a new beginning for others.

Growthpoint will settle the acquisition with a combination of cash and shares. It will issue 93.3 million new Growthpoint shares at R27 each to raise about R2.5bn with the remainder paid by accessing the cash resources from Growthpoint's R2.5bn capital raising in May and its existing debt facilities.

Sasse said the transaction would enhance the underlying income streams from the company's office portfolio, lengthen its average office lease length, improve its overall office vacancy levels and enhance Growthpoint's distribution a share.

He added that it was expected to become effective in the first quarter of next year but the real benefits will come through in Growthpoint's 2015 financial year.

The transaction is subject to the approval of the competition authorities and the adoption of certain resolutions by Tiber.

Growthpoint's shares rose 1.11 percent yesterday to close at R24.70.

  • The Tiber Group was born out of an investment made in South Africa by Italian immigrant Paolo Rivera about 60 years ago in the early 1950s.

    Tiber Bonvec Construction evolved from a family business controlled by two families, Rivera and Cardoso, to what it is today: one of the largest privately owned local construction companies, despite its activities having predominantly been focused in Gauteng.

    An associate company owned by its management, Tiber Bonvec Construction has a reputation for delivering high-quality services across all aspects of building construction and property development, investment and management.

    It has won a number of industry awards and was in 2011 the SA Property Owners' Association overall winner for office developments and the Fulton Award for innovative technologies, both for 15 Alice Lane Towers in a joint venture with Wilson Bayly Holmes Ovcon. 

    Roy Cokayne 
    Business Report

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