Investec Property Fund (IPF) has acquired Dihlabeng Mall in Bethlehem in the Eastern Free State and the Foschini Building in the Johannesburg inner city.
Investec Property Fund (IPF) has acquired Dihlabeng Mall in Bethlehem in the Eastern Free State and the Foschini Building in the Johannesburg inner city.
The purchase consideration for the two properties is R357.5 million and R77.4 million respectively, with the former being settled 100 percent in cash and the latter being settled through an equal combination of cash and IPF shares.
IPF chief executive officer Sam Leon says they are very happy with both these key retail acquisitions as they meet IPF’s objectives of investing in properties, which they believe will deliver sustainable income and growth over time.
The significance of Dihlabeng Mall is that it is the dominant retail centre in its region with 85 percent let to national chains.
He says the Foschini building is well located in the core of the retail node in the Johannesburg CBD at the corner of Eloff and President Streets, secured with a long-term lease from this blue chip company.
Bethlehem acquisition
The Dihlabeng Mall opened in March 2013 and is ideally located being the only mall of its size in a 300km radius.
It comprises 26 680 square metres of retail trading area anchored by national retailers such as Checkers, Pick n Pay and Game, which constitute 42 percent of the gross lettable area – 85 percent of rental income is generated by national retailers and the property is currently 97.2 percent occupied with a vacancy of only 716 square metres, which will only be paid for by the Fund on tenants being secured.
The acquisition is subject to the fulfilment of certain conditions and includes an option valid until December 2014 to acquire adjacent land for potential expansion of the centre, which will allow the centre to further consolidate its already powerful market positioning.
It is being acquired at an initial yield of 8 percent which the Fund believes reflects good value particularly in the context of the rarity of being able to secure such a high quality dominant retail centre that will complement the Fund's current regionally dominant shopping centres’ of Kriel Mall and Great North Plaza in Musina.
Foschini acquisition
The Foschini building is located in the core of the Johannesburg inner city retail node and consists of 6 305 square metres of GLA of retail and office space fully let to the blue chip Foschini Retail Group.
It is being acquired at an attractive yield of 9 percent with a triple net lease in place escalating at 8 percent, with seven years remaining.
“Investec Property, the Fund managers, have a 50 percent interest in both properties once again demonstrating the value of the Investec connection and network to the Fund,” says Leon.
The acquisitions have no significant effect on key pro forma financial metrics and both constitute small related party transactions, in terms of the Johannesburg Stock Exchange Listing Requirements.
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