SYNERGY Income Fund, the specialised retail property fund, has grown its portfolio to R1,7bn, from R280m at the time of its listing on the JSE in December last year.
The fund has bought 11 shopping centres in high-growth areas with a lower living standard measure (LSM).
William Brooks, CEO, said on Thursday the average value of the centres, with an average size of 13000m², was R125m. "We now own seven of the prominent low-LSM shopping centres in the country, and 75% of our portfolio is now in this market," he said.
Mr Brooks said focused specialisation would be a key driver of sustainable investment performance in the South African listed property sector.
"These acquisitions reinforce Synergy's specialised retail offering in the listed property sector," he said. "We believe our focus on the lower-LSM, high-growth market will deliver investor value strengthened by strong operational strategies and controls."
Mr Brooks said mid-sized commuter centres usually dominated rural areas and townships with a formidable mix of national tenants, comparable to those of premium urban centres.
"Lower-income commuter retail assets in these areas offer defensive qualities, solid lease covenants, good growth and robust trading densities," he said.
On Thursday, a special general meeting of Synergy linked unitholders approved its acquisition of Gugulethu Square in Cape Town and Setsing Crescent in Phuthaditjhaba, Free State, for a total of R530m. The purchase will be funded by a combination of debt and equity funding.
The property loan stock company listed on the JSE on December 14 last year, with three properties spanning 27000m². On completion of its latest acquisition, expected in August, its property portfolio will comprise 14 shopping centres covering 177000m².
According to Mr Brooks, portfolio expansion was driving Synergy's strategy to grow a specialised retail property portfolio anchored by and operated in partnership with the Spar group.
Besides improving the overall quality of the fund's portfolio, he said, acquisitions had broadened its geographic diversity. Synergy now holds properties in Gauteng, KwaZulu-Natal, the Western Cape, the Free State, Mpumalanga, North West and Limpopo.
Mr Brooks added: "Active management of Synergy's property portfolio, by Synergy's asset managers, Capital Land Asset Management and Spire Property Management, will unlock further value."