Australia in sight for South African property giants

Growthpoint director Norbert Sasse and chief executive Tim Collyer.
Growthpoint director Norbert Sasse and chief executive Tim Collyer.

South African property giants ­Redefine Properties and Growthpoint Properties are driving the latest cycle of merger and acquisitions as they step up efforts to export capital from their sluggish home market and become global real estate players.

Other South African groups, including a trust run by Investec Bank and the activities of business magnate Nathan Kirsh, who backs Abacus Property Group, are also driving deals, but few are of the scale of the highly active duo.

Perhaps only the takeover of David Jones by South Africa’s Woolworth Holdings will match the ambitions of that country’s property groups in Australia.

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Growthpoint’s support has helped its locally listed trust grow to $2.6 billion and that vehicle last week emerged as a bidder for the GPT Metro Office Fund. However, Redefine has been the most active player, with the support of the $5 billion group propelling Cromwell Property Group’s move on the Investa Office Fund.

Redefine funds holds a 26% stake in Cromwell and provides backing for its corporate and direct property manoeuvres.

The South African real estate investment trust is one of the top 40 companies on the Johannesburg Stock Exchange and manages an asset base worth 65 billion rand ($5.8 billion). In February, it agreed to buy a majority stake in Echo Prime Properties in Poland in a deal valuing that company at $1.7 billion. The company is also setting up in Spain and developing a $130 million student ­accommo­dation complex in Australia.

Cromwell’s purchase of a 9.8% stake in IOF could play out in a number of ways but Redefine’s support got it to the table. This allowed the group to make a play for the $2.5 billion Investa Property Trust portfolio last year and backed its play for the $8.5 billion Investa Office management platform. Cromwell was among the preferred candidates before the unlisted Investa Commercial Property Fund bought the management business from Morgan Stanley for $90 million.

Now, Cromwell’s stake allows it to approach to Dexus Property Group about IOF assets to win its vote at a meeting on its merger plan slated for Friday. But most are tipping a far longer term play.

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