SA’s second-largest listed property group, Redefine Properties, has acquired four A-grade buildings for R520m in its continuing strategy of buying properties located in core markets.
Redefine executive director Mike Flax said yesterday that the group’s acquisition strategy was to focus on A-grade properties with values in excess of R50m.
“We foresee the average acquisition price exceeding R100m, which will enhance the quality of the portfolio, increase the average property value and diversify the fund’s income base across different asset classes and core markets,” he said.
The group, which has an R18,2bn property portfolio, had acquired Linpac Packaging, an industrial property in Cape Town, for R100m, and an Edgars retail property in Johannesburg for R105m, Flax said.
Agreements had been signed to purchase the Deneys Reitz office building in Sandton for R127m and Cornerstone House, an office complex in Crown Mines, for R182m. The acquisitions were subject to Competition Commission approval.
Redefine acquired a 16867m² retail building let on a triple-net lease to Edgars as the head lease tenant for 10 years at an initial yield of 10,9%.
The Deneys Reitz building was being acquired on an initial yield of 10% and provides 8300m² of office space in the Sandton business district.
Deneys Reitz would continue to occupy the building until October, when it relocates to newly developed premises.
Redefine was planning to upgrade the building once the tenant had left, and was confident it would be relet once the upgrade was complete.
Cornerstone House offers 12000m² of office and ancillary space on a standalone site within the De Beers business complex near Crown Mines.
The lease with the single tenant expires in 2015, with a perpetual option to renew.
Flax said that in tandem with its acquisition strategy, Redefine would also look to dispose gradually of noncore properties that do not hold strategic value.
“Some of the properties valued at less than R50m will be sold, as well as properties located in non core markets with declining growth prospects, or properties geographically located in markets that do not allow for ease of on-site management,” he said.