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Oryx Properties Limited to Invest N$300m in Tower International

by Kelvin Chiringa

PSG Namibia has confirmed that Unit holders are informed that Oryx Properties Limited (“Oryx”) has signed an irrevocable undertaking with Tower Property Fund Limited (“Tower”), a Real Estate Investment Trust (REIT) to co-invest in its offshore properties.

Tower Property Fund Limited is also listed on the Johannesburg Stock Exchange with a market capitalisation of R2.5 billion and a property portfolio valued at R4.7 billion,

Tower owns a N$1.46 billion Croatian property portfolio (in existence since 2015) which it is in the process of ring-fencing through a separate offshore company to be named Tower International.

According to PSG, TIL would leverage Tower’s existing relationships in Croatia and surrounding countries to grow the group’s European exposure and income.

The intention is to list the company on the Stock Exchange of Mauritius and on the Johannesburg Stock Exchange in due course.

ORY will acquire shares in TIL for N$200million, and then subsequently subscribe for further shares in TIL for N$100million.

The undertaking will lapse if conditions are not in place by 31 July 2018. The share sale and subscription agreement will be signed once TIL has been formally incorporated in Mauritius.

The intention is that ORY will own circa 28% of the shares in TIL.

ORY’s initial yield on the investment is expected to be 6.8% and increase to 7% after the subscription agreement. The transaction is being funded by Absa Bank Limited on the loan amount of N$300 million euro equivalent at an interest rate of 3 months Euribor + 1.37% over a three-year term.

Meanwhile, Simonis Storm Securities updated its forecasts after Oryx Properties Limited (ORY) released its HY18 results on the 1st of March 2018. 

According to the brokerage firm’s analyst, Megameno Shetunyenga, they further adjusted their FY18E and FY19E headline earnings per linked unit (HEPLU) forecasts by 2.6% and 5.1% to 159.3 cents and 163.4 cents, respectively. 

“Our adjustments were mainly driven by an additional slightly downward adjustment on rental income, upward adjustment on investment income (factoring in the potential N$ 300 million offshore investment).”

“Our 3 year HEPLU CAGR forecast is now 0.4% driven by the sharp downturn brought on by the slowdown in the economy. On the back of these adjustments to our model we slightly increase our TP to 2055 cents (from 2029 cents) as we roll forward our valuation and maintain our rating at SELL,” said Shetunyenga.