Atlantic Leaf buys into UK-based Seahawk
The JSE’s latest offshore property offering, Atlantic Leaf Properties, last week announced its first sizable acquisition since the counter made its AltX debut three weeks ago.
The deal will see Atlantic Leaf acquire a 30% share in a portfolio of 30 retail warehouse properties in the UK through the buyout of Isle of Man-registered holding company Seahawk Investments.
The acquisition will be done done in two tranches, of which the first will see Atlantic Leaf acquire 60% of the issued share capital of Seahawk for GBP6.92m. Thereafter, the company will have the option to acquire the remaining 40% of Seahawk.
Atlantic Leaf is the brainchild of Paul Leaf-Wright, the Cape-based chartered accountant and founder of corporate advisory, private equity and property management group Leaf Capital. The latter has R4.5bn worth of mostly Western Cape-based properties under management.
Last year, Mr Leaf-Wright was in joint venture talks with Amdec Property Development, owner of trendy Joburg hot spot Melrose Arch, to list a property portfolio with a combined value of about R10bn. Mr Leaf-Wright said the listing did not materialise because market conditions changed, making it more difficult to raise capital via the JSE.
Besides, Mr Leaf-Wright believes there are now better investment opportunities offshore, with some real estate markets offering yields of 7% – 8%, which is attractive given UK and European debt funding rates of below 5%.
Atlantic Leaf has its primary listing on the Stock Exchange of Mauritius and completed a secondary listing on the JSE on April 3 following a share placement to selected private investors. Though the company is still a minnow, with a JSE market capitalisation of only R270m, Mr Leaf-Wright said the plan was to grow assets to about GBP100m (R1.76bn) over the next 2-3 years.
Management will initially focus on acquiring smaller warehouse, industrial and distribution centres in outlying areas of the UK and stakes in offshore real estate investment trusts (Reits). Germany and France are also on the radar.
Mr Leaf-Wright said once the initial portfolio had been assembled, the company planned to raise further capital from institutional investors. From the outset it will pay biannual dividends (sterling based). “The Seahawk acquisition is in line with the company’s primary objective of investing in quality, investment-grade real estate assets and companies that offer potential for both income and capital growth.
Atlantic Leaf is the eighth offshore-focused property counter to list on the JSE in the past five years. The others are Redefine International, MAS Real Estate, Rockcastle Global Real Estate, Investec Australia Property Fund and UK mall owner Intu Properties.
Date: 23 April 2014