New property income fund lists on the JSE

New property income fund lists on the JSE

Plans several acquisitions and the Spar connection.

Synergy Income Fund has listed on the Johannesburg Stock Exchange (JSE) with a view to raising capital for possible acquisitions in 2012. CEO William Brooks says the company needs access to the capital markets “for further acquisitions that are well progressed and will be coming through early next year”. Most of Synergy’s properties are anchored by retail giant Spar or SuperSpar as part of a formal co-operating agreement between the fund and the Spar group. “We think that’s a real competitive advantage going forward,” Brooks says.

Synergy’s portfolio includes Sediba Plaza Shopping Centre in Hartebeespoort, the Nzhelele Valley Shopping Centre in Makhado, Hubyeni shopping centre in Elim, Richdens Village Centre in Hillcrest, the KwaMashu Shopping Centre outside Durban and the Taxi City Shopping Centre in Newcastle. Brooks said the company was concentrating on the lower LSM segment of the population due to its growth potential for disposable income. Around 70% of Spar’s growth is also coming from this segment, which Brooks believes is likely to offer investors good returns.

On Synergy’s link with Spar, Brooks said the group was owned by independent retailers who had no retail property assets in their portfolio, they don’t own any shopping centres nor do they have a property development team. This, together with the fact that Spar does not invest group capital in terms of retail property investment, provided the perfect opportunity for Synergy to align itself with the group.

It also gave Spar a chance to expand its retail footprint by having strong relations with a property investor and developer. “It’s about driving growth of new centres as well as expanding and improving existing centres and managing them more effectively.”

Asked how Synergy had raised the capital to list, Brook explained the company had raised R300m through a private placement last year while R240m came from the Liberty Group. Another R50m had come from RE:CM and the company’s founders put in R20m. “This gave us an initial capital base of R300m which enabled us to buy shopping centres at the beginning of the year. We got to the stage where we needed to finance some lumpy acquisitions, hence the decision to go to market to raise additional capital,” Brooks said.

He added he could not elaborate on Synergy’s pipeline as yet but that an announcement would be made “fairly soon”. In a statement the company said the listing would make Synergy the first specialised convenience retail property fund on the JSE, comprising 12 properties with a gross lettable area of more than 130 000m², valued in excess of R1.1bn. “The properties range in size from 5 000m² to almost 23 000m² and are focused on the high-growth low LSM sector of the consumer market.”



Denny Crane

Denny Crane
It's not me ... yet. Denny Crane from the TV series Boston Legal. Click on picture if you're not sure who he is!