VENTURES AFRICA – The portfolio of Synergy Income Fund has increased from R280 million ($33 million), in December when it was listed on Johannesburg Stock Exchange (JSE), to R1.7 billion ($202 million) according to the fund’s chief executive officer, William Brooks’ disclosure.
Brooks said the specialized retail property company has also purchased 11 shopping centers in high growth areas with a lower living standard measure (LSM) each with an average size of 13,000 square meters and value of R125 million ($15 million). He also said that Synergy Income Fund currently owns seven of South Africa’s prominent low LSM shopping centers, with 75 percent of the fund’s portfolio deeply rooted in the market.
According to him, the acquisitions reinforce Synergy Income Fund’s specialized retail offering in the listed sector. “We believe our focus on the lower-LSM, high growth market will deliver investor value strengthened by strong operational strategies and control,” he added.
He mentioned how rural areas and townships in South Africa are being dominated by mid-sized commuter retail centers with a strong mix of national tenants that are similar to those of premium urban centers. He also noted that lower-income commuter retail assets in mid-sized commuter centers offer defensive qualities, solid lease covenants, good growth and robust trading densities.
In related news, Synergy Income Fund’s unit-holders Thursday, at a special general meeting, approved the Synergy’s acquisition of Gugulethu Square in Cape Town and Setsing Crescent in Phuthaditjhaba, Free State. The acquisition deals cost Synergy a total of R530 million and will be funded by debt and equity funding, Business Day reported.
Synergy Income Fund was listed on JSE on December 14, 2011 with only three properties that spanned 27,000 square metres. After completing recent acquisitions in August, the company will have 14 shopping centers that cover 177,000 square metres. This is in line with the company’s portfolio expansion target which is driving its strategy to grow a specialized retail portfolio that is anchored and operated via a partnership arrangement with Spar group.
Concerning the prospects of the company, Mr. Brooks added: “Active management of Synergy’s property portfolio, by Synergy asset managers, Capital Land Asset Management and Spire Property Management will unlock further values.”
Synergy Income Fund currently holds properties in Gauteng, KwaZulu-Natal, the Western Cape, Free State, Mpumalanga, North West and Limpopo – all in South Africa.