GLOBALWORTH STAKE ACQUISITION
Growthpoint gains a foothold in Romania
The largest South African-based real estate company, Growthpoint Properties, is finally making a foray into Europe, having waited to find a strong investment partner.
Growthpoint on Thursday announced it would subscribe for an initial 26.9% stake in Alternative Investment Market-listed Globalworth Real Estate Investment, the largest owner of office space in Romania.
Growthpoint, which has market capitalisation of R70.4bn, would make an initial €186.4m investment in the real estate developer, owner and manager, launching Growthpoint’s central and eastern European strategy.
Growthpoint CEO Norbert Sasse said this deal offered the real estate investment trust (Reit) a "conservative market entry point and a high-growth investment platform" in a transaction which was "expected to be accretive to its distributions".
Globalworth’s €1bn property portfolio included mostly modern 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.
Many of its office tenants operate in the information technology sector.
"Globalworth is internally managed by a 70-strong professional team led by CEO, major shareholder and founder Ioannis Papalekas, who has established a respected 15-year track record in all aspects of property in Romania.
Following Growthpoint’s initial subscription, Papalekas will continue to own 25.7% of the enlarged share capital of Globalworth," Growthpoint said in a statement.
"With the subscription for new shares, Growthpoint’s significant capital injection into the company will provide the key to unlocking exciting new growth, strategies and prospects for Globalworth," said Sasse.
Growthpoint would look to invest in other institutional markets in central and Eastern Europe such as Poland, Hungary and the Czech Republic through Globalworth, Sasse said.
"It’s taken us a while to find a good partner with a strong opportunity which brings value to our shareholders. Offshore we needed to partner with a company like Globalworth which will manage the assets. Otherwise we would have been annihilated if we had tried to buy assets and manage them on our own," said Sasse.
Growthpoint’s main offshore investment is in the A$1.98bn ($1.47bn) Growthpoint Australia, in which it is a majority shareholder with a 65% stake. Australia would remain its primary offshore arm, Sasse said.
Grindrod Asset Management chief investment officer Ian Anderson said Growthpoint was taking a measured approach.
"I think the best way to describe it is just dipping their toe in. They’re also coinvesting which I think is an extremely prudent strategy given the current market conditions."