Nedbank backs more retail growth through Synergy
Nedbank Corporate Property Finance partnered with Synergy Income Fund Limited to purchase King Senzangakhona shopping centre in Ulundi, KwaZulu-Natal and The Setsing Crescent shopping centre in Phuthadijhaba, Free State, says Richard Thomas, regional exec
Nedbank partnered with Synergy Income Fund to purchase King Senzangakhona shopping centre in Ulundi, KwaZulu-Natal and The Setsing Crescent shopping centre in Phuthadijhaba, Free State.
The purchase of two shopping centres by Synergy Income Fund Limited, in part through a R234 million loan from Nedbank, further underscores the bank’s commitment to the listed and retail property sectors.
“Nedbank partnered with Synergy to purchase King Senzangakhona shopping centre in Ulundi, KwaZulu-Natal and The Setsing Crescent shopping centre in Phuthadijhaba, Free State,” says Richard Thomas, regional executive: Nedbank Corporate Property Finance. “These acquisitions support the robust growth of the Synergy portfolio to 14 shopping centres with a combined value of R1,7 billion and a gross lettable area (GLA) of 177 000m2.”
Modern and well-constructed, King Senzangakhona Centre provides a full retail and service offering: the main linear mall, with line shops and the central SPAR anchor; a formal taxi and bus rank; a KFC drive-through; a Game; a fast food offering and a car service centre. The centre is situated just off the R66, which is the main road running through and into Ulundi, and is highly visible and easily accessible. The development of the taxi rank has had a positive spin-off in terms of exposure for the line shops that otherwise had limited exposure.
The Setsing Crescent Shopping Centre is in the former QwaQwa homeland, Phuthaditjhaba, which is 50km from Harrismith and 80km from Bethlehem in the Free State. Situated on the main road that runs through Phuthaditjhaba, the centre is accessible and is in one of the dominant regional centres in this growing node. A high-quality retail centre with national tenants accounting for approximately 95% of the occupied gross lettable area, this crescent-shaped mall is anchored by SuperSPAR and Game, and surrounded by line shops with a central pavilion and standalone KFC.
Other properties in Synergy’s portfolio include Sediba Plaza in Hartebeespoort, Ruimsig in Roodepoort, Taxi City in Newcastle and Gugulethu Square in Cape Town.
Listed on the Johannesburg Stock Exchange in December 2011, property loan stock company Synergy Income Fund Limited is a specialised retail property fund investing in midsized commuter and small regional shopping centres located in high growth rural and township nodes. Synergy operates in partnership with leading convenience retailer Spar.
Synergy’s market capitalisation is currently in excess of R1.1 billion following a recent capital raising during August 2012.
In addition to William Brooks as CEO and Uys Meyer as financial director, Synergy’s Board of Directors brings a wealth of experience to the table that includes Chairman Martin Kuscus and other board members such as Maurice Mdlolo, chief operating officer for Liberty Properties and Sean Segar, an executive with NedGroup Investments.
Synergy Income Fund CEO William Brooks believes specialisation is a key driver of sustainable investment performance in the SA listed property sector. “These acquisitions reinforce Synergy’s specialised retail position in the sector. Our focus on the lower LSM high-growth market is positioned to deliver investor value strengthened by strong operational strategies and controls.”
Synergy Income Fund offers investment in its A- and B-linked units, each offering investors a different risk and reward profile. The A linked units have a preferential entitlement to distributions, with an initial one-year forward distribution yield of 9.4% and annual distributions that escalate at 5% until 30 June 2017 and thereafter at the lower of 5% and CPI. The remaining distributable income, after the payment of distributions to A-linked unit holders, accrues to B-linked unitholders.
“The average 10% yield at which Synergy listed compares favourably to other listings with portfolios of similar quality and size and their portfolio of community and regional shopping centres is set to grow,” says Thomas.
“Nedbank Corporate Property Finance is a leading provider of funding to the listed-property sector covering the majority of the companies listed on the JSE. We believe that Nedbank has provided a tailor-made financial solution for Synergy’s investment that uplifts and empowers all stakeholders, and we look forward to partnering with Synergy further.”
