Acquisitions boost Spearhead portfolio

Posted On Monday, 29 September 2003 02:00 Published by eProp Commercial Property News
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Spearhead Property Holdings has continued to acquire properties

Mike FlaxHaving this month announced a 14% increase in its year-end dividend, Spearhead Property Holdings has continued to acquire properties that the company believes it can upgrade or redevelop in way that will add significantly to future profits.

Some R100 million has been committed for the new purchases and their redevelopment. The first property acquired is Wynberg Mews. This 7 100m2 building has been bought from Grayprop for R15m.

The broker was Colin Murray of Baker Street Properties. The property consists of three two-storey and one four-storey blocks and is on Brodie Road, Wynberg.

Approximately 10 years old, the buildings are in good condition, says Spearhead's chief executive officer, Mike Flax.

Currently the main tenants are Picardi Liquors (this is their head office), the IT company Log Tech, and Total Care, which operates in the insurance fields. These major tenants occupy some 50% of the total space.

The return on the investment will be 16%, says Flax. Although this is "satisfactory", he believes that a further R2m spent in upgrading will improve the return to around the 19% level. "One of the big advantages of this complex," said Flax, "is its position.

It is close to the Wynberg Chelsea village which has an upmarket, chic image and is conveniently sited in relation to the access roads to the CBD, the airport and the rest of the Peninsula." The second acquisition is Sun Valley Mall, bought in joint venture with the Regent Property Group. The seller was Liberty Life and the price paid was around R22m. A Pick 'n Pay Corporate Store is the anchor tenant.

Spearhead development manager Anthony Wolpert says that while Sun Valley Mall has been slightly overshadowed by the larger, more modern Long Beach Mall, it still has huge potential because it is so easily accessed from the entire Fish Hoek Valley and has more than sufficient parking.

It also has some 9 000m2 of land suitable for development for convenience store facilities. The existing complex, says Wolpert, has suffered from its austere '60s-type inward orientation but it can without difficulty be converted into a more consumer friendly, outward looking complex.

Spearhead's third new buy comprises two large buildings with 17 000m2 on the edge of the Cape Town CBD eastern precinct.

These buildings, for which Spearhead has paid R21m, are bounded by McKenzie, Wesley and Roodehek streets and cover two whole city blocks. The buildings will be demolished to make way for a sophisticated seven-storey residential complex with 145 units which is being designed by Peerutin Architects.

Prices of the units in the new complex, says Flax, will be competitive with those of other recently released City Bowl and CBD residential units and the mix will include sophisticated penthouses and lofts. Generally, he says, the fittings and features will be of a higher standard than has ever been seen in the lower Gardens area.

A commercial component of 1 000m2 will be included in the development and this will, says Flax, benefit greatly from its high visibility from De Waal Drive. Wolpert says the new complex, still to be named, will appeal to the growing market looking for developments which offer a live, work, play and entertainment lifestyle within one single comprehensive facility.

The deal was brokered by Brian Goldberg and Stephen Kruger. Flax said that Spearhead remained on track to have a portfolio valued at over R1bn by the end of 2005.

The three latest acquisitions, coming on top of three similarly sized buys earlier this year are, he says, important steps towards the achievement of this goal



Last modified on Friday, 09 May 2014 21:09

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