According to Alliance Group Chief Executive, Rael Levitt, the list of properties for sale includes one of the highest value pieces of retail property ever submitted to the South African public by auction - the Highland Mews Shopping Centre in Witbank.

The R250-million auction sale comes soon after the recent announcement by leading listed property group, Redefine, that it too will be offloading a significant parcel of smaller properties which do not fit its strategic investment profile.

In a statement last week Redefine Director, Mike Flax, said that the newly merged Redefine will dispose of some 40% of its portfolio, but in value terms this will represent less than 20% of the portfolio. These properties, says Flax, are often multi-tenanted and many lack the potential to be transformed. Concurrent with implementing this process, Redefine will seek to acquire new blue-chip, higher profile stock and will continue with its ongoing programme of refurbishing, upgrading or extending current stock.

“This seems to be a strategic trend in the listed sector,” says Levitt. “Over the next twelve months, we are going to see a structural realignment in the commercial property market as larger, newly consolidated property funds offload several billion rand of non-core investments to smaller funds, private investors and individual consortiums.” 

South Africa’s leading auctioneers believe that the opportunities these mass portfolio disposals will present to investors, particularly new entrant BEE consortiums, will re-align South African real estate for the next decade.

“For decades, prime retail, industrial and office real estate was held and snapped up by the larger listed property sector that had balance sheet strength, depth of management and economies of scale to keep large and varied portfolios.  Since 2000, many of the listed funds have become far more niched and focused and have been selling off their smaller properties which has allowed the emergence of smaller  privately held property funds,” explains Levitt. 

“Now we are seeing a further consolidation with the sale of large parcels such as SA Corporate and others.  We will be offering the wider market prime South African real estate, which simply is no longer the focus of the bigger groups but nevertheless unprecedented opportunities for those who could not previously get their hands on such cash-generative investments.”

Alliance will be selling these properties at two auctions in Johannesburg and Durban on the 2 December. Independent valuations concluded in June conservatively value the portfolio at just over R250-million.

The largest property on auction is the Highland Mews in Witbank, which is a single-storey retail centre fronting three main streets.  The 17 000m2 modern retail village mall, situated south of the Witbank CBD, is multi-let to a variety of retail tenants including major national chains such as Woolworths, Foschini, Clicks, Wimpy, Russels and Markhams. “This is arguably the largest centre to hit the South African auction floors, ever,” says Levitt.

Another property which has been sparking public interest is an eight-storey Chapel Street building in Pietermaritzburg which is solely occupied by the KwaZulu-Natal Department of Health.   “These types of single-tenanted properties occupied by government departments and with strong and lengthy leases do not hit the market that often, and have been attracting BEE groups who have the ability to negotiate further long term leases.