HYPROP AND VUNANI CAPITAL IN TRANSFORMATION VENTURE TO PILOT NEW PROPERTY FUND
In a transformation initiative that enables leading listed retail property fund Hyprop Investments to contribute to enterprise and skills development in the property industry, Hyprop has joined Vunani Properties (“Vunani”), a subsidiary of black-owned financial services group Vunani Capital, to launch Vunani Property Investment Fund (“VPIF”). Black-owned Vunani will hold a 50,2% stake in VPIF while Hyprop will hold the remaining 49,8% interest.
Hyprop CEO Pieter Prinsloo says that Hyprop has elected to conclude a BEE transaction in the form of a sound commercial initiative to contribute to enterprise development in line with the Property Transformation Charter. In addition Hyprop has undertaken to support Vunani with the transfer of asset management skills. “Enterprise development and skills development are clearly considered important objectives in the property industry which has been historically characterised by a dearth of professional investment and asset management skills,” he says.
VPIF will be launched off an initial aggregate asset base of R350 million with Hyprop and Vunani contributing R175 million worth of property apiece. While the portfolio will comprise mainly commercial properties in Johannesburg, Pretoria and Cape Town with government tenants including the State Information Technology Agency and the City of Cape Town, the fund will seek to diversify its investments across all property sectors and geographical regions. Within its acquisitive growth strategy VPIF will focus on property development in under-resourced areas as emphasised in the Charter.
Prinsloo says that VPIF will leverage Vunani’s strong empowerment credentials to access and secure future acquisitions. “VPIF’s strategic objective, utilising Vunani’s empowerment platform, is to reach a target critical mass of R700 million in the medium term in order to facilitate a possible listing on the JSE at that time,” he says. VPIF has been structured from inception to facilitate a possible future listing.
He is confident of the benefit to Hyprop of the initiative. “VPIF will not detract from Hyprop’s core focus on premium shopping centre assets and should be earningsenhancing in the medium term”.
From Vunani’s perspective VPIF provides the opportunity to accelerate its diversification from property development into property investment and asset management. Vunani Capital CEO Ethan Dube, who also sits on Hyprop’s board, says: “Working with an established industry leader in the form of Hyprop has ensured that we can achieve our objective of establishing Vunani as a key player in property asset management in the short term.”
Dube adds that “Hyprop has supported Vunani by putting the strength of its balance sheet behind VPIF to support its financing arrangement and to provide a platform for growth through future acquisitions".
Since 1998 Vunani Capital has established itself as a strong financial services group.. The formation of VPIF has given the group a vehicle through which to further expand its current activities in the property sector. “Through VPIF we have now extended our focus to property asset management opportunities that can generate fee income as well as allow Vunani to participate in capital growth,” says Dube.
Shareholders’ and property acquisition agreements have been concluded. Transfer of the properties to VPIF is expected to follow in the next six months, subject to Competition Commission approval.