Tower mulls separate listing of Croatian assets

LISTED Tower Property Fund is considering the possible separate listing of Tower Property Fund (TPF) International, the Mauritius-based company it established to ring-fence its property assets in Croatia.

The five Croatian properties owned by Tower accounted for 28 percent of the fund’s total property assets, which were valued at R4.9 billion at the end of May.

Marc Edwards, the chief executive of Tower, said yesterday it was considering listing TPF International, because investing in an unlisted entity was problematic for institutional investors.

Edwards said the stated intention of TPF International was ultimately be listed, but Tower felt that it was too small to list with assets of only €100 million (R1.54bn).

He said the ring-fencing of the Croatian assets was to allow for growth and to strengthen Tower’s balance sheet.

Edwards in February confirmed that Tower was set to double its exposure to the Croatian property market through the acquisition of several buildings for about €100m in the next 18 to 24 months.

He said yesterday that the first €20m of this investment was in the final stages of negotiation and should close shortly.

“There is a nice pipeline of opportunities that we would encourage TPF International to take advantage of, but to do that, they would need to raise fresh capital in that business,” he said.

Edwards said Tower would not necessarily support such a capital raise from a financial perspective, because its yield was too high at the moment to do so and would be prepared to dilute its shareholding in TPF International to take advantage of those opportunities.

He said Tower would need to encourage investors into TPF International to give it confidence about access to capital before it closed out the other proposed acquisitions.

Edwards said the debt funding for these acquisitions was available, and they now had to take these opportunities to South African investors. “TPF International has had various conversations with certain local (Croatian) pension funds, which have expressed interest to support,” he said.

Tower shares closed unchanged on the JSE yesterday at R6.70.