Vukile acquires stake in Synergy from Liberty Group Limited

Vukile Property Fund CEO Laurence Rapp says that the 34% stake acquired in Synergy Income Fund from Liberty Group Limited, is earnings enhancing and strategically aligned.

Vukile Property Fund Limited, today announced that it has acquired a 34% stake in Synergy Income Fund Limited from Liberty Group, boosting Vukile’s investment exposure to retail property and the Western Cape region.

In the agreement, Vukile will acquire 52,300,000 Synergy B- linked units in Synergy.

The purchase consideration will be discharged by an issue of approximately 20.6 million Vukile linked units to Liberty on 17 December 2013, which will be held in the Liberty Property Portfolio.

JSE-listed REIT Vukile holds a diversified portfolio of 81 property assets valued at R10.3 billion and has a market capitalisation of R8.1 billion.

Laurence Rapp, CEO of Vukile explains that the transaction is earnings enhancing and strategically aligned.

“Growing exposure to retail property, particularly shopping centres that serve the lower income and emerging middle markets is at the core of Vukile’s strategy. Synergy fits the bill. It’s a good addition to our portfolio and complements our overall exposure to this growing market,” says Rapp.

Synergy, a JSE-listed REIT, is a specialised retail property fund with a focus on midsized shopping centres in high-growth nodes and generally serving lower income consumers. It owns 15 shopping centres in six provinces, valued over R2.2 billion, dominated by commuter-oriented centres in township areas and rural towns.

“Synergy has built a good portfolio,” notes Rapp. “Its property footprint is concentrated in the Western Cape where we are currently under-represented, making it even more attractive to Vukile.”

“This is an effective growth course in the current market and advances Vukile’s portfolio composition objectives. We will continue looking for opportunities that are earnings enhancing and strategically aligned to our overall objectives of building a high-quality portfolio that favours the retail sector predominantly serving the lower income market,” says Rapp.

Last month Vukile declared a distribution of 54.81c per linked unit which represented growth of 5.0% for the six months ended September 2013.

The group’s net profit available for distribution was R343.8 million — a rise of 28% from the comparable period.