Chief executive Ari Jacobson said the purchase of Access Park Kenilworth, which had provided compound growth of just under 14% over the past decade, was "stability enhancing" for Vividend. The property is tenanted by retail outlet stores and factory shops.
Jacobson said the property provided "better-than average" lease escalations of 10%.
The acquisition of Access Park Kenilworth, which would be Vividend's largest property by value, would mean that Vividend's portfolio comprises 22 properties.
Jacobson said an increase in competition for the relatively small assets being sold by larger property groups had driven down their yields even though the risk remained unchanged. The increased competition was a result of the massive inflow of smaller funds to the market.
Vividend had decided to "go down the yield chain" to pursue stability and defensive income growth, Jacobson said. Although the acquisition was dilutionary in terms of linked unit distributions since the acquisition, it provided "defensive and resilient longevity and growth potential to the company's earnings, which is considered appropriate in the current economic climate".
Jacobson said that, "given the stability of our income with this asset, we may be offering one of the better yields in the market".
"The Access Park Kenilworth acquisition is for a high-quality, well established, and historically resilient property, both in terms of income growth and tenant demand," he said.
The remaining 10% of the Access Park Kenilworth property not held by Vividend after the acquisition is subject to separate option agreements.
Source: Business Day via I-Net Bridge
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