BLKRSTR

In line with its strategic roadmap, the Group continues to focus on its core precincts with the super-regional Mall of Africa being the anchor retail destination in Waterfall City.

Attacq Limited (“Attacq”), the JSE-listed Real Estate Investment Trust (REIT) and strategic development partner in Waterfall City, today announces that its 70% held subsidiary, AWIC, has acquired the remaining 20% stake in Mall of Africa from the Atterbury Group. AWIC currently holds an 80% stake in the asset.

The Mall of Africa is one of South Africa’s leading super regional malls across all performance metrics, and anchors Waterfall City, a growing, large scale mixed-use precinct encompassing residential, logistics and collaboration hubs as well as two strongly performing hotels, all of which provide high volumes of quality foot traffic to the mall.

As of 31 December 2023, the mall’s compounded annual trading density growth over the past three years was 16.1% whilst its rent to turnover ratio was healthy at 7.5%. Going forward, the mall also stands to benefit from the continued densification of Waterfall City as AWIC rolls out its development pipeline of residential, logistics and collaboration hubs.

Attacq CEO, Jackie van Niekerk, comments: “We are delighted to announce this transaction as the Mall of Africa is undoubtedly one of Attacq’s flagship retail assets. As Waterfall City continues to densify, sole ownership of the mall will allow control over the asset in influencing growth and trade, and we aim for Mall of Africa to remain one of SA’s top-performing super-regional malls.

Furthermore, in March we indicated to the market during our interim results presentation that we would look to acquire key assets after disposing of the Group’s MAS shares and this transaction demonstrates our commitment to delivering against what we had promised.”

The iconic Mall of Africa recently celebrated its eighth birthday and opened its doors in 2016 as South Africa’s largest shopping mall ever built in a single phase, with over 130 000m2 of fully occupied retail space, and features leading international apparel brands and national favourites. The mall is also home to Attacq’s SOOK Space, an on-demand leasing solution aimed at small business enterprise needs and emerging entrepreneurs.

Recently, Attacq announced the opening of six brand new rooftop Padel courts in September, adding an additional lifestyle element to the asset that includes the Waterfall Park and also features Bounce indoor trampoline park aimed at the younger demographic.

 

Redefine Properties (JSE:RDF) continues to operate efficiently and allocate capital with discipline, strengthening and positioning its balance sheet to withstand the challenging environment and seizing opportunities as they arise.

The company reported on Monday that distributable income increased by a respectable 6.1% to R1.7 billion during the six months leading up to 29 February 2024. This is against the R1.6 billion achieved in the comparable period and translates to 25.3 cents (HY23: 23.9c) per share.

Ntobeko Nyawo, CFO of Redefine, said the group was able to sustain its operating profit margin at 76.5% (HY23: 76.7%), despite the tough conditions that local property counters and other interest rate-sensitive companies find themselves in.

“Like other local counters, we’ve navigated a difficult downturn and maintained our resilience,” said Redefine CEO Andrew König. “The higher-for-longer interest rates remain a persistent theme and relief is critical to moving the dial on most outcomes.”

He said Redefine is, however, not hitching its fortunes to interest rate cuts. “Instead, we have focused on variables within our control that can directly influence value creation, like capital allocation, capital sourcing, maximising rentals, and containing costs.”

Redefine has been highly strategic about where it allocates capital, focusing on recycling non-core assets to fund expansion activities where possible.

In an effort to enter the rapidly expanding township market, the company raised funds through the sale of non-core assets to purchase a stake in the retail establishment Pan Africa Mall in Alexandra, Johannesburg. The R1.8 billion purchase of Mall of the South was another significant deal concluded during the period.

“The future of physical shopping is not as bleak as many expected it to be post-COVID,” said Redefine COO Leon Kok. “Despite interest rate pressures and shoppers’ limited disposable income, the retail sector, supported by demand for essentials, value, and apparel, is performing relatively well.”

Redefine grew year-on-year trading densities by 4.8% to R34 460 per sqm, which contributed to an average rent-to-turnover ratio of 7.4% across the retail portfolio. According to Kok, this means there is opportunity for rental growth and will enable the company to pursue renewal rates in the retail sector more aggressively.

Both the retail and industrial portfolios reported a substantial improvement in rental renewal reversions during the period, with renewal rates now marginally negative in retail (-0.5%) and positive (4%) in industrial.

On a total portfolio basis, negative reversions have come down to -0.5%, compared to -3.7% in HY23. This result was skewed by higher negative reversions (-13.6%, HY23: -12.4%) in the office portfolio.

Kok noted the current oversupply of office space, and somewhat muted demand. “As a result, we can anecdotally refer to it as a tenant market, because they have options and the ability to shop upwards and occupy well-located, quality office space at relatively affordable rentals.”

Nevertheless, companies are continuing to make their return to physical office spaces and are seeking high quality P and A grade space, of which 95% of Redefine’s portfolio is comprised.

While the group reported slight deterioration in occupancy and Kok noted that pressure will remain, Redefine continues to hold its own. “The office portfolio at a net operating income level grew by 4.1%, outperforming our industrial portfolio, which speaks to its quality,” Kok said.

He reiterated that Redefine is geographically diversified and has scale across the three traditional property sectors of South Africa: retail, office, and industrial. “When there is instability and unfavorable economic conditions, this diversity becomes most beneficial because it allows us to mitigate some of the challenges that sectors or geographies may encounter.”

South Africa’s property owners continue to face significant challenges from increased load shedding, rising municipal rates, and utility bills. Redefine is proactively managing these risks and costs by implementing renewable energy and working with City Improvement Districts to improve municipal services in the areas where it operates.

“We are proud of our 41MW of installed Solar PV capacity across all sectors in the country, the bulk of which sits in retail space. Another 21MW is currently in progress, as we look to increase our capacity in the next 12 to 18 months. This will stand us in good stead to mitigate some of the cost pressures we face locally,” Kok said.

Meanwhile, in Poland, the energy price crisis, which was the biggest driver of high levels of inflation in that jurisdiction, has recovered and returned to near pre-crisis levels. This is leading to an increase in disposable income, which has also been helped by policies implemented by the new government, such as an easing of the ban on Sunday trading and raising the child social grant.

These factors, König said, bode well for the retail sector in Poland, which Redefine increased its exposure to by lifting its ownership level in Polish retail platform EPP from 95.5% to 99.2%. Occupancy levels in the core EPP portfolio sit consistently at 98.4% and the portfolio is essentially considered fully let.

“This forms part of the goal,” König said, “to create a high-quality, diversified portfolio that can generate long-term, risk-adjusted returns in a hard currency.”

“We don’t have many levers at our disposal to alter the circumstances of the external environment. So, for us, it comes down to concentrating on what we can control, such as investing strategically and focusing on conservative balance sheet management.”

According to Nyawo, the group’s healthy liquidity profile, which it has maintained at R4.2 billion, remains at levels that provide sufficient strategic headroom to weather any unforeseen events in the near term, thereby anchoring balance sheet strength.

He added that the group’s healthy debt maturity profile has helped its liquidity position with no more than 18% of facilities coming up for maturity in FY25 to FY27, which can be comfortably refinanced.

“When interest rates are high, it’s imperative to adequately hedge and protect ourselves. Approximately 76.7% of the group’s debt is hedged; during this time, we are hedged for an average term of 1.5 years, and the short, dated tenors seek to avoid baking in long-term pain of higher rates.”

König concluded by saying: “We intentionally chose not to be sidetracked by the noise, knowing there will be aftershocks along the way as we move toward a normalised interest rate environment. There will, however, be new opportunities and, across our organisation, we are aligned to mindfully opting for the upside.”

Two years since launching, Growthpoint Student Accommodation REIT has introduced R1.5bn in new investment to this alternative property sector, added 4,000 new beds for students and created a strong pipeline of future developments. Its demonstrated execution has expanded its portfolio value to approximately R3.5bn, representing 12 residences with 9,000 beds in three South African cities – Cape Town, Johannesburg, and Pretoria. With two new developments in the ground, it expects to increase its beds to 10,400 for the 2025 academic year.

“We are pleased to report that our portfolio occupancy is 98% for the 2024 academic year, exceeding that of 2023,” reports Amogelang Mocumi, Fund Manager of Growthpoint Student Accommodation REIT. “Our new purpose-built properties, developed by Growthpoint Properties and Feenstra Group, are proving particularly popular, attracting the highest demand and occupancy.”

Growthpoint Student Accommodation REIT was launched in December 2021 by Growthpoint Investment Partners, the co-investment business of SA REIT Growthpoint Properties (JSE: GRT). It invests in purpose-built student accommodation located and designed around students to help them succeed and make the most of their university experience.

Two new properties opened in the portfolio, branded Thrive Student Living, for the 2024 academic year, and both have been enthusiastically welcomed by the market. Horizon Heights in Johannesburg is 99% occupied for its first year of housing students, proving popular with those from the nearby University of Johannesburg as well as the University of the Witwatersrand. Fountains View in Pretoria is 98% full, primarily let to students from Sefako Makgatho Health Science University (SMU) and the University of Pretoria’s Groenkloof campus.

“Our high occupancy levels demonstrate strong demand and the commercial success of our purpose-built student accommodation model, which is supported by quality development and the Thrive Student Living brand, which resonates with our target market,” says Mocumi.

Continuing its growth, Growthpoint Student Accommodation Holdings has two new properties under development for the 2025 academic year: a R300m 900-bed property located in Braamfontein and a R200m 500-bed located in Parktown, both targeting Wits University students.

It is also planning a development near the University of KwaZulu-Natal’s Howard College Campus in Durban for the 2026 or 2027 academic year intake.

These new developments boost job and economic opportunities, making Growthpoint Student Accommodation REIT a compelling proposition for impact investors to participate in this alternative asset class that has strong fundamentals and proven resilience, together with the long-term positive socioeconomic impacts of education support.

Even with the extensive processes and time required for institutional investors to allocate capital to new investments, Growthpoint Student Accommodation REIT continues to attract serious interest from large investors. “Investors remain positive about purpose-built student accommodation, even while they have short term reservations about the commercial real estate asset class as a whole,” reports Mocumi.

Growthpoint Student Accommodation REIT aims for total returns of 13% to 16% in the long-term. Its target is to grow the portfolio to R12bn worth of assets and achieve a stock exchange listing within the next seven years.

Fashioning vibrant campus communities aligns with many investors’ environmental, social and governance (ESG) goals. Each building added to the Thrive Student Living portfolio is unique in its architecture and design to reflect and foster its specific community. They all have the advantage of being purpose-built and operated and benefit from Growthpoint’s recognised green building leadership, creating healthy, sustainable environments and operating with a social consciousness that adds value to communities.

Thrive Student Living accommodation provides amenities like study areas and games rooms, backup power and water, as well as its Student Life programme which offers 24/7 support to students for academic performance, physical health, and mental wellness. It gives parents and bursary providers peace of mind, knowing that students are in the best possible environment.

Growthpoint Healthcare REIT has successfully completed the R106.4m acquisition of the Johannesburg Eye Hospital in Northcliff, which has transferred to become the ninth asset and the second specialist healthcare facility in its portfolio.

The premier specialist eye hospital in South Africa, and arguably on the African continent, the Johannesburg Eye Hospital has an esteemed 20-year history and is a valued member of its neighbourhood and community. The hospital specialises in eye surgery, laser eye procedures and includes the Medwedge Stepdown Facility.

Growthpoint Healthcare Property invests in licenced healthcare facilities which include acute, day and specialist hospitals, laboratories and biotechnology – such as pharmaceutical – manufacturing and warehousing facilities.

Launched in 2018 as SA’s first unlisted REIT focused exclusively on healthcare real estate, Growthpoint Healthcare REIT has R3.8bn of assets under management. After two-plus years of lost growth stemming from the impact that the COVID-19 pandemic had on the healthcare sector, it is asset-hungry with cash on hand to invest.

Dr Linda Sigaba, Fund Manager of Growthpoint Healthcare REIT, confirms that investment in specialist healthcare properties, such as the Johannesburg Eye Hospital, are attractive options in the current market.

“While there is an oversupply of private acute and multidisciplinary medical facilities in several areas, there is still a real need for specialist healthcare facilities,” says Sigaba.

These include sub-acute and stepdown facilities as well as those catering to mental wellness, oncology, urology and cardiology, among others.

“South Africa certainly needs more healthcare properties, and whether operated by the public or private sector, Growthpoint Healthcare REIT is positioned to support the healthcare sector in meeting the needs of South Africans,” notes Sigaba.

Growthpoint Healthcare REIT’s mandate is to acquire and develop healthcare properties, whether building new facilities, expanding or upgrading standing facilities, or acquiring existing properties to unlock operational and growth capital for their operators.

Its portfolio now includes a pharmaceutical warehousing and distribution facility, a medical chambers property and seven hospitals. These facilities are managed by some of South Africa’s finest medical providers, enjoy long leases and are considered long-standing landmarks in their communities.

Growthpoint Healthcare REIT distributes at least 90% of its distributable earnings to investors and targets gross ungeared total returns of between 13 and 16% a year. It remains focused on achieving a significant liquidity event for investors in future. Its current loan-to-value ratio is only 17%, and it already ticks all the boxes for an IPO and stock exchange listing.

Vukile Property Fund (JSE: VKE), the specialist retail real estate investment trust (REIT) has secured R1.1bn of funding through an innovative green loan and sustainability-linked loan with Absa. The loans, which are refinancing existing debt facilities, will be enabled as part of the refinancing process of existing debt and will be specifically directed to Vukile’s solar PV project and linked to its sustainability targets. The goals include reducing carbon emissions, boosting water savings and educating property professionals — initiatives that benefit the environment and society and align with Vukile’s wider environmental, social and governance (ESG) commitments.

Vukile’s approach to sustainability is ingrained into its culture with transparent measurement and reporting of sustainability targets to ensure alignment of its ESG strategy throughout the organisation. This supported the efficient and creative funding solution with Absa, which promotes greater alignment of Vukile’s financial strategy to positive environmental and social outcomes, where interest rates are directly linked to the achievement of preset targets.

Laurence Rapp, CEO of Vukile Property Fund, comments, “This sustainability-linked loan is a first for Vukile and represents a significant milestone in our ongoing commitment to sustainability.”
Through its expertise and commitment to sustainable finance, Absa played a crucial role as lender and sole sustainability coordinator, ensuring alignment with the Loan Market Associations’ Green Loan and Sustainability Linked Loan Principles.

Heidi Barends, Head of Sustainable Finance for Absa, says, “We partnered with Vukile to ensure market leading performance indicators are set for this funding solution, that are relevant to their sector and aligns to their business strategy. By combining environmental and social objectives, we’ve set a new standard for sustainable investment. Vukile is clearly committed to sustainability and we’re proud to have advised it on this strategic transaction. Our guidance throughout underscores our commitment to driving meaningful change in the financial landscape.
Maurice Shapiro, Group Head of Treasury of Vukile, remarks, “As our partners and a key stakeholder, Absa played an important role in delivering a fit-for-purpose innovative solution that helps align Vukile’s funding strategy with its ESG goals. Vukile is committed to making a difference for our communities, and we are pleased to partner with Absa.”

Vukile is committed to advancing its positive impacts through renewable resources, water-saving initiatives and education of property professionals, in line with its well-defined business strategy, based on the belief that thriving communities create successful shopping centres.

Rapp concludes, “Vukile aims to drive economic growth and be a change agent for social well-being and environmental stewardship, which ultimately assists our customers, our tenants and our business. We are committed to leading the way in sustainability and reporting openly about our practices.”

As a specialist retail REIT, Vukile was developed on the foundation of a well-defined, specialised growth strategy, with a focus on owning dominant retail assets across South Africa and Spain. Vukile’s assets are valued at around R40 billion, with 40% in South Africa and 60% in Spain. The Spanish assets are held in the 99.5% Vukile-owned Madrid-listed subsidiary, Castellana Properties Socimi. Vukile adopts a proactive approach to asset management and a strong focus on customer centricity as the driver of stakeholder value creation.

 
Image: Laurence Rapp, CEO of Vukile Property Fund