The combined investment for this international landmark and South Africa’s most popular tourist destination totals some R9,7 billion for the purchase of 100% of all Istihmars’ and London and Regionals’ financial interests in Lexshell 44 General Trading (Proprietary) Limited, with provision for the acquisition of the remaining ordinary shares held by Lexshell’s empowerment shareholders.
This transaction represents South Africa’s biggest single property transaction to date.
Growthpoint is the largest South African listed property company and is included in the JSE ALSI 40. Its 50% stake in the V&A Waterfront takes its total assets to in excess of R40 billion. Growthpoint owns a quality portfolio of some 460 properties throughout South Africa and in Australia, spanning the office, retail and industrial sectors.
Africa’s largest pension fund, the Government Employees Pension Fund (GEPF) has more than 1.2 million active members, around 318,000 pensioners and beneficiaries. The PIC, which is wholly owned by the South African Government, is one of the largest investment managers on the African continent.
Located around the historic Victoria and Alfred Basins which formed Cape Town’s original harbour, the V&A Waterfront is a mixed-use property development and is a showpiece for South Africa being its most visited tourist destination attracting in excess of 21 million visits annually.
It is widely recognized as one of the finest waterfront developments in the world.
Set against a backdrop of sea and mountain views, shopping and entertainment as well as arts and culture venues are intermingled with office locations, nine hotels and 518 luxury sectional title apartments in the residential marina.
The V&A Waterfront consists of 603,868sqm of bulk development rights approved by the Cape Town City Council of which approximately 64% (383,833sqm) has been developed and approximately 36% (220,035sqm) remains available for development.
“We are pleased that this South African landmark will once again rest in South African hands,” says Elias Masilela, CEO of the PIC. “In addition to the benefits this asset will bring to many South African pensioners who now own 50% of the viable and dynamically growing V&A Waterfront, it also represents an opportunity for growth which will come from the future development of the undeveloped bulk.”
Norbert Sasse, CEO of Growthpoint Properties Limited, explains that the transaction has been driven by the existing performance, and future potential, of this prize property asset. “More than being the premier property asset in Africa, the V&A Waterfront has all the performance fundamentals in place.”
Masilela points to it being a unique and highly desirable destination and historic landmark situated on a vibrant working harbour, which is an important international trading route for South Africa, with great proximity in Cape Town including its immediacy to the Cape Town International Convention Centre as well as the new Cape Town Stadium and park.
“V&A Waterfront enjoys robust demand across all sectors with lower vacancy rates than anywhere else in the country and benefits from significant net income growth,” explains Sasse.
The developed property boasts a well established and mature portfolio of properties across the retail, office, hotel and industrial sectors, with attractive rentals, rental escalations and lease expiry profiles. The V&A Waterfront has a mix of long-term high profile retail and business tenants.
A key component to the transaction is the significant value potential to be unlocked through the development of the approved developable bulk at the V&A Waterfront.
“The development rights provide flexibility in terms of land use rights and timing of development and the purchasers intend to pursue new developments which create the best value over time,” says Sasse, who notes that the transaction is consistent with Growthpoint’s objectives of providing linked unitholders with long term sustainable income and capital growth.
Masilela concurs on the importance of the future development at one of South Africa’s most significant harbours. “We determine a positive future through the investments that we make today and the prudent management of these investments,” says Masilela.
Both stakeholders are long-term property investors with the collective access to funding to drive the development of the bulk at the V&A Waterfront. In addition the valuable insight both purchasers bring to the V&A Waterfront in terms of their extensive property experience and expertise will stand the V&A Waterfront in good stead as an exceptional destination and as a quality investment asset.
Future plans will ensure it continues to be fresh and relevant to Capetonians - who have a strong emotional attachment to, and pride in, "their" waterfront - and visitors alike, and that it continues to set the benchmark for international waterfronts.
For Growthpoint, the transaction meets its long-stated goal of expanding its retail property portfolio - already one of South Africa’s most extensive retail portfolios - with quality retail assets to enhance the balance of the company’s sectoral spread. Retail activities within the V&A Waterfront are spread amongst various buildings, with the largest being the Victoria Wharf shopping centre.
Furthermore it also provides Growthpoint investors with noteworthy exposure to the hospitality sector, enhancing the company’s overall diversity, with the addition of nine V&A Waterfront hotels, including Cape Grace Hotel, One & Only Hotel as well as the Table Bay Hotel.
For the PIC the transaction meets its objectives of sound investment and effective contribution to sustainable economic development.
The transaction remains subject to a number of conditions including inter alia Competition Commission and exchange control.
