Madison secures stake in management of multi-million UK property company

Madison secures stake in management of multi-million UK property company

Property asset management company Corovest Fund Managers, in which JSE-listed Madison Property Fund Managers Limited has a 40% interest, has acquired 50% of Wichford Property Management Limited.

Corovest undertakes the management of CIREF Limited, which is listed on the London Stock Exchange AIM. Wichford Property Management Limited is the property manager of London Stock Exchange listed property company Wichford Plc.

Wichford owns 78 properties across the UK, France and Germany totalling 322,000m² and externally valued at close to £700 million. The company’s portfolio is focused on properties occupied by central and state government bodies in UK and central Europe. Its current market capitalisation is £194.915 million.

Corovest’s 50% stake was acquired from Laird Capital Limited and the remaining 50% is held by the boutique investment firm JO Hambro Capital Management Limited. The purchase price of £11.0million is payable in two tranches, with 50% payable now and the balance, which carries interest, due at the end of two years. The transaction is 50% geared.

As part of the transaction, Standard Bank’s Real Estate Investment Division has acquired a 10% stake in Corovest and the vendor of the 50% stake in Wichford, Laird Capital, has acquired a 5% stake, as a result of which Madison’s interest in Corovest has been reduced to 34%. The proceeds of the sale will be utilised to fund Madison’s share of the first tranche and thus Madison will not advance any further funds for the initial tranche of the purchase price.

The combination of Corovest and JO Hambro is expected to be highly beneficial to Wichford and its shareholders. “The partners are committed to expanding the business and believe that in the current market opportunities exist for value-adding property acquisitions,” says Corovest CEO Mike Watters.

The acquisition will also be earnings enhancing for Madison’s investors. Corovest’s share of Wichford’s earnings for the first full year is estimated at £1.85 million before interest which is expected to add approximately 1,5 cents per linked unit to Madison’s earnings at the current exchange rates.

Madison director Marc Wainer says that the Wichford acquisition significantly boosts the assets under management for Corovest and creates a strong platform for further growth for both funds under management and is in line with Madison’s strategy of extending its offshore business.

Stewart Shaw-Taylor, Global Head of Real Estate Investments for Standard Bank says that the investment in Corovest is representative of a continuation of a long standing relationship with both Madison and Corovest and is an exciting opportunity to grow with them in new markets.