SAPOA STATEMENT REGARDING A JOHANNESBURG BILLBOARD

In line with the SAPOA Code of Ethics and Conduct, SAPOA makes reference to a billboard along Main Road in Bryanston, Johannesburg (image attached). The billboard, from ‘the concerned property industry’, has the words “The poor people of South Africa matter more than you Mr President”. SAPOA is not aware who erected the billboard in question, and whilst its membership owns and controls approximately 90% of commercial property in South Africa, SAPOA would like to disassociate itself with its contents.

 

SAPOA members and their employee representatives are committed to promoting the highest level of professionalism, integrity, and ability available in the commercial property industry in all its forms. This Code of Ethics and Conduct is designed to foster trust and mutual respect amongst those working in the industry as well as the public at large.

SCHRODER EUROPEAN REAL ESTATE INVESTMENT TRUST PLC ACQUIRES SHOPPING CENTRE IN SEVILLE, SPAIN

Schroder European Real Estate Investment Trust plc (“SEREIT” or the “Company”), the company investing in European growth cities, has completed the purchase of the Metromar shopping centre in Seville, Southern Spain, from UBS Asset Management. The total purchase price is approximately €52.5 million, reflecting a net initial yield of 6.2%. SEREIT is acquiring a 50% stake in joint venture with the Schroder advised Immobilien Europa Direkt (“IED”).

 

Seville is the capital of Andalucía and Spain’s fourth largest city and is an important tourist destination. The city is expected to outperform national averages in terms of both economic growth and consumer spending over the next five years[1].

 

The 23,500 sqm shopping centre is let to 50 tenants, with a significant convenience retail offering, anchored by a 2,300 sqm Mercadona grocery supermarket. The discretionary retail tenants include Zara, Mango, Sfera, H&M, Pull & Bear, Stradivarius, Bershka and Cortefiel. The centre has a significantly enhanced leisure offering compared with other similar centres in the region, anchored by a 12 screen cinema and a number of restaurants. This is reflected by the centre’s annual footfall of circa four million people, of which 50% are classified as ‘walk-in’.

 

Metromar’s sales growth over the past three years has been robust: 4% in 2014; 8% in 2015; and 4% in 2016. This reflects the quality of the tenant base and its dominant position within the growing residential suburb of Mairena del Aljarafe.

 

Located alongside the Ciudad Expo metro station, Metromar also benefits from good road access, with the A-8057 (33,000 cars a day) and SE-30 (Seville’s primary ring road) within close proximity. The centre is located in a densely populated area, with a catchment of 60,000 people in the immediate vicinity, and a further 250,000 within a 15 minute drive.

 

The asset is 90% let by area (98% by ERV) and generates an annual rent roll of €4 million. The current weighted average lease term is nine years (and three years to first lease break) and the leases are subject to annual rent indexation.

 

The business plan for Metromar is to maximise investment returns through a combination of maintaining the current, high occupancy level and undertaking a number of asset management initiatives to improve the vibrancy and consumer experience. Several opportunities have already been identified to increase income returns through improving both the attractiveness of the centre and its dominant position in south-west Seville.

 

This is the ninth acquisition by SEREIT, which has now invested €212 million at a blended net initial yield of approximately 6.2%, in established Western European growth cities.

 

The acquisition is being part funded with a new loan facility secured against the asset. The loan for the whole property is €23.4 million (SEREIT share €11.7 million), representing a loan to value of approximately 45%. The loan term is seven years and the interest rate is fixed at 1.76% p.a. SEREIT now has total third party loans of €60.4 million, representing an overall loan to value across the Company of 26% at an average weighted interest rate of 1.30%

 

Tony Smedley, SEREIT Fund Manager, commented:

 

“With retail expected to be a key beneficiary of Spain’s economic recovery, this acquisition is a welcome addition to the portfolio, offering significant diversification for our investors whilst growing our dividend yield.

 

“We have been tracking this opportunity for some time and are pleased to complete the purchase. The property has a strong occupational track record, is located in one of the region’s fastest growing conurbations and fits with the wider portfolio strategy to acquire accretive assets that offer an attractive income profile with additional asset management potential.

 

“We are excited to be delivering on our stated IPO strategy, building a considerable portfolio of diverse assets that are set to be beneficiaries of the improving economies and long term urbanisation theme being witnessed across the European cities in which the Company is invested.”

PRETORIA PROPERTY GOES ON AUCTION IN TIGHTLY HELD INDUSTRIAL NODE

Investors and business owners are gearing up for the on-site auction of industrial property situated in the East Lynne industrial area of Pretoria on 31 May 2017. A 2 506m² warehouse, which covers the majority of the property and is clearly visible from one of Pretoria’s busiest highways, offers excellent exposure. Sold with vacant occupation, this well maintained property is suited to an end-user or owner-occupier.

 

Located at 730 Darling Street in Waverley, the property extends over 2 873m² of Gross Lettable Area (GLA) on a 7 134m² site and boasts a large yard as well as the warehouse, which is in excellent condition and has double volume height. The property is positioned in very close proximity to a prominent taxi rank and bus station, making it ideal for a business – such as a cash and carry store or wholesaler – that could benefit from the high-volume foot traffic during early morning and late afternoon rush hours.

 

Greg Nafte, Director of Nexus Property Group (NPG) says that opportunities such as this one do not present themselves very often in the East Lynne industrial node as the area comprises of only a handful of properties which tend to be quite tightly held. “Many of the businesses in the area are already established, which means the trade of property occurs infrequently if at all. This property has only come under the hammer as a result of a multi-national logistics company consolidating its operations,” says Nafte.

 

He explains that the neighbouring industrial nodes of Silverton and Waltloo are extremely desirable and have seen some of the highest rental rates per square meter achieved in the Gauteng province, making property in the East Lynne area a key long-term investment with sustainable rental growth.

Art Deco commercial building sold in heart of Cape Town

An iconic, landmark Art Deco building, 50 on Long Street in the heart of Cape Town CBD, which was recently sold  for R37 million in a transaction brokered by Annenberg Property Group, is to undergo a complete interior refurbishment.

Situated in a prime location on the corner of Hout and vibrant Long Street, this freestanding commercial building comprises a gross lettable area of 3 075sqm incorporating ground floor retail plus six storeys of commercial office space and a penthouse apartment.

Tenants will be able to customise the office space to their own exact business requirements. The building will include 24-hour security, a standby generator, CCTV and access control and will be fibre optic ready. The location is on MyCiti bus routes in a popular and dynamic area which is home to a large selection of restaurants, cafes and art galleries.

Says Lyall Johnson, Annenberg property broker who concluded the deal on behalf of the seller: “A Heritage building, the property has been acquired by a Cape Town based investor who will refurbish and re-tenant the site and may in the future use a portion of the building for one of his own enterprises. Sport & Surf, which is located in the ground floor retail space and has been trading there for over 10 years, will remain a tenant.

“Not surprisingly the property attracted a great deal of interest in the marketplace. There is a huge demand for properties of this nature in Cape Town CBD, whether for office use, pure investment or residential conversions. The building is exactly what the buyer was seeking. We were briefed in terms of what he was looking for and sourced the correct property which aligned with his requirements.”

All the internal areas of 50 on Long Street will be refurbished to a AAA grade standard, including common and office areas, lifts and air conditioning as well as a new reception fronting on to Long Street which replaces the existing entrance off Hout Street. The aesthetic of the building will include the use of timber, stone and panelling detail in the reception, with black steel cottage pane shop fronts on all office levels. Completion of the refurbishment project is anticipated for August this year.

Says Andries Louw, a director of Annenberg Property Group: “The property has good ‘bones’ and lends itself well to the creation of a modern offering that will appeal to the tenant mix targeted. Currently the market is seeing a significant amount of buyers, mostly investors or developers, who are seeking opportunities such as this with sound potential.

“Generally, owner occupiers are looking at smaller sectional title opportunities which are few and far between. As a result, there is a wide range of tenants out there from attorneys, accountants and architects as well as small tech companies and designers seeking modern space with the character that this kind of building provides once refurbished. The refurbished office space will be marketed at competitive asking rentals of R130 per square metre.”

Cape Town CBD continues to experience considerable investment as evidenced by the number of redevelopments, including mixed-use offices and retail in the near vicinity along Long and Loop Streets.

From a business, investment, residential and entertainment perspective Cape Town’s central city comes out tops, says Louw. “Wesgro recently announced that the International Congress and Convention Association has rated the Mother City as number one in Africa for convention business and among the top 40 global destinations for business tourism.

“Investor confidence in the city continues to run high as evidenced in a recent report by the Cape Town Central City Improvement District, which reveals a thriving and vibrant area characterised by constant revitalisation and currently enjoying an average occupancy in commercial property of 91 percent.

“With hospitality, finance and business services as key drivers of the local economy,  investment in real estate in the area continues apace, with a host of new developments and projects recently completed such as the state-of-the-art Netcare Christiaan Barnard Memorial Hospital in the Foreshore Precinct. What brings home the sustained, major investor confidence in the Cape Town central city is the fact that between 2016 and 2020 this area will enjoy huge investment in excess of R12 billion in a broad range of developments either under construction, undergoing refurbishment or in the planning and proposal stages.”

For further information contact Lyall Johnson of Annenberg Property group on 021 4657780 / 082 4456 3362 or email lyall@annenberg.co.za.