R3.5bn boost for Pivotal before it lists

PIVOTAL, the property fund that anticipates listing on the main board of the JSE next month, has concluded conditional acquisition agreements valued at R3.5 billion to bulk up its property portfolio.

They include a conditional memorandum of understanding for a proposed $48 million (R525m) interest in an unspecified development in Lagos in Nigeria. The fund said on Friday assuming all the transactions were implemented, the value of Pivotal’s total portfolio would increase to about R9.2bn at end-August market values.

The transactions are conditional on Pivotal listing.

Pivotal’s portfolio was valued at R3.4bn at end-August, with a further R1.8bn held through property-owning trusts, where the preference shares had not yet converted to ordinary shares.

The fund has concluded agreements to acquire for R3.5bn the balance of the undivided shares in co-owned properties and other properties, comprising income-producing properties valued at R2.9bn and current and future development pipeline valued at R600m.

This includes the remaining 80 percent of the Alice Lane development in Sandton, Goldfields Mall in Welkom and Lakeview Office Park in Constantia Kloof.

The acquisitions will be funded from a combination of the issue of new shares, additional borrowings, the R200m rights offer undertaken in September and the proposed R1bn placement that Pivotal will undertake once it has listed.

Current and future developments by the fund include the 35 000m 2 Alice Lane Building 3, construction of which has already commenced and which is expected to be completed by early 2017; the first building at West End Office Park in Centurion, which is expected to be completed in May; a 33.3 percent investment in Herford Office Park at the corner of Allandale and Bekker roads opposite the Mall of Africa development; the acquisition of an 80 percent interest in the proposed 25 000m 2 Kyalami on Main Mall development; and the proposed 22 500m2 expansion of the Wonderboom Junction by November 2016.

Pivotal, which has a strategic partnership with property development and management group Abland and other developers, on Friday reported an almost 6 percent growth in net asset value a share (NAVPS) excluding deferred tax to R15.55 in the six months to August compared to its NAVPS in February.

The fund uses NAVPS as its key performance measure because, given the nature of its business, it is considered a more relevant performance measure than earnings or headline earnings a share.

Pivotal has achieved a compound annual growth in NAVPS of 24.1 percent from 2009 to February this year, which was largely been driven by the underlying property revaluation.

It is forecasting a more than 20 percent year-on-year growth in NAVPS for the year to February next year.