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South African property leader to enter Australian market through Orchard fund takeover

Published 20 May 2009

South Africa’s largest listed property company, Growthpoint Properties Ltd, will enter the Australian listed property sector by taking a controlling interest in the struggling Orchard Industrial Property Fund.


The Orchard fund’s responsible entity, Orchard Property Ltd, said on Monday it had entered into an implementation agreement with Growthpoint to recapitalise & restructure the fund via a $A200 million capital-raising, comprising a $A56 million placement of securities to Growthpoint and a $A144 million rights issue to be underwritten by Growthpoint.


The fund’s management will also be internalised by stapling fund units to shares in a newly appointed responsible entity. The proposal is subject to unitholder approval at a meeting to be held in July. Orchard’s independent directors have agreed to support the proposal, in the absence of a superior proposal and subject to an independent expert concluding it’s in the best interests of unitholders.


Growthpoint chief executive Norbert Sasse said it would own 50.1% of the restructured Orchard fund. The restructure will cut the fund’s gearing from 66.2% to 42.4%.


Growthpoint has assets of R29.1 billion (SNZ5.7 billion). It owns & manages 437 properties across the office, retail & industrial sectors and its gearing in December was 36.3%.


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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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