The South African Competition Commission has approved the £335m sale of the Tiber Group’s management business and real estate portfolio to Growthpoint Properties.
The 27-property portfolio spans more than 320,000sq metres of prime office space, mainly in the Sandton area of Johannesburg. It is home to several multi-national head offices including Nestlé, Barclays and Merrill Lynch. There is also a half-share stake in nine other properties and 48,000sq metres of undeveloped land.
“A portfolio of this quality and size, centred in arguably the best investment property location in South Africa, is a once-in-a-lifetime opportunity and beneficial for shareholders,” said Growthpoint’s chief executive officer Norbert Sasse. The acquisition will also lengthen Growthpoint’s average office lease length and, with a 95 per cent occupancy rate, reduce its overall office vacancy levels.
Already the largest property company in South Africa — with property assets of £3bn — the multi-million pound transfer is the biggest single deal for Growthpoint which owns more than 5.4m square metres of retail, office and industrial space in the Republic and Australia. Its portfolio made up of 393 properties in South Africa, 48 properties in Australia and a 50 per cent interest in the iconic V&A Waterfront in Cape Town.
Because the deal also involves the transfer of Tiber’s management structure, Sasse confirmed: “Growthpoint will gain the core competencies, skills and longstanding relationships with tenants of the Tiber portfolio, and have access to the executive team who conceptualised, built and managed the properties.”
He confirmed his company would also be exploiting the land attached to the acquired properties. “As part of the agreement, Growthpoint will enjoy continued access to Tiber Construction’s development and construction expertise for this bulk and when exploring other development and redevelopment opportunities for its growth pipeline,” he added.
Last week Growthpoint Properties announced a distribution growth of 8 per cent for its six-month period to December 31, 2013. Sasse attributed the better than expected results to the solid performance from his company’s portfolio and the South African property market as a whole. “Notwithstanding the challenging market conditions, we’re pleased to report positive performance for our investors and deliver results ahead of expectations,” he said.
Tiber is currently one of the largest privately owned construction companies in South Africa and was founded by an an Italian immigrant, Paolo Rivera, in the early 1950’s. For Tiber, the transaction will create liquidity for shareholders and unlock the next phase of its development business, said its present CEO Stephen Scott.
“While achieving these goals, we wanted to find an excellent home for our people and our property portfolio, and believe we have done this with Growthpoint,” he added. “Tiber considered several alternatives and ultimately Growthpoint enabled us to realise an enhanced value for our shareholders. It has the ability to readily access and implement large transactions of this kind.”
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