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Buy-out
Valad Property group will exit its 50/50 joint venture with Kennards, redeploying $69 million worth of capital to reduce gearing on its balance sheet by 1 per cent.
In 2004, Valad teamed up with Kennards to acquire 24 properties under the Millers Self Storage brand in a deal worth $215 million. Valad raised $92.6 million at the time, of which about $32 million was used to acquire an additional bulky goods centre in western Sydney.
Kennards’ managing director Sam Kennard told The Australian Financial Review that the decision to break was mutual but “the time was going to come and you can’t get emotional about assets”.
“It’s a big move for us”, he said. “We will probably talk through other property opportunities with Valad in the future.”
“They have certainly been good people and good partners. They have enjoyed investing with us.”
“We have nothing but praise for those guys, they have been terrific”, he said.
The initial yield on the Millers deal of 9.2 per cent, was a key attraction for Valad, which beat other players APN, Macquarie Goodman and the Sydney-based Austcorp to join Kennards in buying the Millers business and create a new giant in the self-storage market.
But in February, Valad stated that it would aim to strengthen its capital position by reducing debt via the sale of non-core assets.
In an announcement to the ASX it said: “Consequently, an agreement has been reached to progressively sell all of Valad’s interest in the portfolio to the Kennard family over the next 18 months. The transaction is expected to complete by June 30, 2008.”
The Australian Financial Review
Tuesday 24 June 2008
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