June 2 (SeeNews) - South Africa's Tower Property Fund said it has signed a deal to sell its Velica Gorica retail property in the Croatian capital Zagreb for 9.1 million euro ($10.2 million), equivalent to the property's book value, to local company 3D Real Estate No.1
"As with the recently announced Vukovarska disposal, this disposal is line with Tower’s strategy of actively recycling assets which are considered to have reached their growth potential, and where Tower believes the sale proceeds could be better utilised elsewhere," Tower Property Fund said in a statement on Monday.
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The sale is expected to be wrapped up in July.
The property was acquired in 2016 for 8.8 million euro, thus the disposal consideration of its pending sale represents a 7.5% yield.
The property covers an area of 15,741 square metres, with a gross leasable area (GLA) of 4,858 sq m, and comprises a stand-alone Super Konzum retailer with a small number of line shops linked to the property.
In March, Tower announced it was selling its Vukovarska retail property in Zagreb at an 11% premium to its book value, or at 12.42 million euro, to Zagreb-based 3D Real Estate No.1, which is active in the management of real estate on a fee or contract basis.
Tower is selling the two properties via Zagreb-based Tower Retail, which is wholly-owned by TPF International Limited (TPF), Tower’s Mauritian 74%-owned unit which operates its Croatian assets.
With the sales, Tower aims to strengthen its balance sheet by reducing its loan to value across the board, and particularly reducing euro debt secured against its South African portfolio.
With the proceeds from the sale of Vukovarska, Tower's loan to value is expected to drop to 38%, while the proceeds from the sale of Velika Gorica will further cut the loan to value ratio of the company to 37%.
In February, Tower said that it owns a portfolio of 43 properties in South Africa and Croatia valued at 5.0 billion South African rand ($289 million/259 million euro), adding that the six properties in Croatia represent 32% of the fund’s total value.
(1 euro = 19.3192 South African rand)