Growthpoint Properties jumps into Europe acquiring stake in Globalworth
Growthpoint Properties, the largest South African listed REIT, has considered Romania following the group's decision to acquire 26.9% stake in Globalworth Real Estate Investment Limited as its first foray into Europe.
Its €186,4 million investment in the Romanian-based real estate developer, owner and manager, launches Growthpoint’s Central and Eastern European (CEE) strategy with a conservative market entry point and a growth investment platform in a transaction that it expects to be accretive to its distributions.
Globalworth’s €1bn property portfolio includes mostly A-grade offices, industrial properties, a residential complex, as well as developments. Its portfolio is concentrated in Bucharest, Romania, and underpinned by Euro-denominated leases with many multinational business brands.
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Listed on London Stock Exchange Alternative Investment Market, Globalworth is internally managed and led by founder Ioannis Papalekas, who has established a respected 15-year track record in all aspects of property in Romania. Mr Papalekas will continue to own 25.7% of the enlarged share capital of Globalworth.
It has taken us some time to find the right partners and expertise to create a powerful platform for high-growth CEE property investment, said Norbert Sasse, CEO of Growthpoint Properties.
“We are thrilled to embark on this partnership with Globalworth as an established, high-quality, real estate business. We look forward to being part of its phenomenal growth story, to the benefit of our shareholders and investors,” he said.
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Commenting on Growthpoint’s investment, Mr Papalekas says: “We are delighted to welcome Growthpoint as a major strategic shareholder to our company. We believe that this transaction will transform our business and we look forward to working together with them towards creating one of the leading institutional real estate investors in the region.”
The CEE region represents the globe’s 11th largest economy. It achieved 3.1% real GDP growth in 2015, nearly double that of the Euro area at 1.6%. Its growth is expected to exceed 3% over the next five years. This presents a compelling proposition compared with South Africa’s sub-1% growth.
The CEE region’s growth is being driven by a young, skilled and cost-effective labour market, competitive industries, EU funded investment in infrastructure, greenfield foreign direct investment in manufacturing, and business process outsourcing from multinational corporations.
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“There are few assets in the market that meet the firm demand for quality, investment-grade offices,” explains Mr Sasse. “This presents exciting development opportunities in these jurisdictions, especially as multinational corporates are committing on long-term contracts.”
Growthpoint’s subscription for the initial 26.9% stake in Globalworth is below the mandatory offer threshold of 30%, and will be funded in Euros. In terms of the deal, Globalworth has agreed to issue Growthpoint a further 1,000,000 fully-paid up fee shares by 31 December 2017, thereby increasing Growthpoint’s stake in the enlarged share capital of Globalworth to 25.3 million shares or 27.7%.
The transaction is subject to the usual conditions precedent, including approvals from the South African Reserve Bank and Globalworth’s shareholders. Already, irrevocable commitments in favour of the transaction had been received from shareholders holding more than 75% of shares in issue.
Meanwhile, Redefine Properties, the second South African listed REIT, yesterday announced it had won an overwhelming shareholder support in its takeover of local property developer and capital growth fund Pivotal (JSE: PIV).
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