October 3, 2024

Growthpoint Properties advances sustainability goals with automation and 1ai

Growthpoint Properties (JSE: GRT) has developed a bespoke automation solution in partnership with 1ai, a leading provider of intelligent automation solutions, to streamline the processing of municipal invoices while unlocking valuable sustainability data. The initiative forms part of Growthpoint’s broader efforts in using pioneering technology to enhance operational efficiencies and reduce environmental impact to achieve its ambitious sustainability goals.

With its extensive South African portfolio spanning around 350 buildings, Growthpoint processes more than 1,100 municipal invoices each month, a task requiring around 160 hours of manual handling, and diverting resources from other vital activities. This makes it difficult to extract and apply critical data related to utility consumption, such as power and water use information.

Recognising the potential for automation to transform this process, Growthpoint collaborated with 1ai to develop a bespoke system that automates the invoice processing workflow while extracting and structuring the useful sustainability data embedded within the documents. The result is a process that combines advanced Robotic Process Automation (RPA) with powerful text extraction algorithms, designed to manage the varied formats and complexities of municipal invoices.

The project has already delivered substantial operational benefits. In addition to saving 475 hours per month across both invoice processing, as well as the extraction and analysis of sustainability data, Growthpoint can now redirect resources towards other efforts, such as enhancing sustainability reporting and supporting the company’s broader environmental, social, and governance (ESG) goals.

Engelbert Binedell, Chief Operating Officer at Growthpoint Properties, says, “Automation has significantly improved our invoice processing and data analysis capabilities. By accurately capturing detailed utility data, we are now better equipped to meet our sustainability targets and optimise resource management across our properties. This improves our efficiency and enhances our strategic decision-making process.”

Rudolph Janse van Rensburg, Founder and CEO of 1ai, adds, “Our partnership with Growthpoint demonstrates the practical value of intelligent automation in managing complex processes. By streamlining the processing of municipal invoices, and thereby unlocking critical sustainability data, we have helped Growthpoint enhance operational efficiency while gaining valuable insights that support their sustainability goals. Our collaboration reflects a shared commitment to leveraging technology to drive efficiency, sustainability, and innovation in the property sector.”

The success of the initiative is a key component of Growthpoint’s strategy of incorporating intelligent automation across various aspects of its operations, with plans to expand the application of RPA to other critical areas, including vendor onboarding and contract lifecycle management.

Binedell says the automation initiative aligns with Growthpoint’s vision of remaining at the forefront of sustainable property management and setting new standards for operational excellence and environmental stewardship within the industry.

Vukile continues its Iberian charge while banking a significant profit of over R1.5 billion for shareholders with Lar España disposal

03 October 2024. Vukile Property Fund (JSE: VKE) confirmed its intention to accept an improved cash offer for its 28.8% stake in Lar España Real Estate following careful evaluation of its options. Vukile’s investment in Lar España, held through its 99.5%-owned Spanish subsidiary, Castellana Properties, has realised significant value for Vukile shareholders.

The consortium involving Hines European Real Estate Partners III and Grupo Lar Inversiones Inmobiliarias, Lar España’s asset manager, has increased the offer from EUR8.10 per Lar España share to EUR8.30 per share for all shareholders following its negotiations with Vukile.

The disposal will allow Vukile, via Castellana, to achieve an internal rate of return of approximately 45% p.a. since January 2022 in ZAR terms. This represents an investment return of almost three-times in under three years from the initial Lar España investment.

Laurence Rapp, CEO of Vukile Property Fund, said: “Our ability to identify mispriced assets, both listed and unlisted, and interpret market nuances through our on-the-ground asset management expertise, defined by profound knowledge of the property industry and retail specialisation, inform our capital allocation strategy. Our synthesis of corporate finance and deal-making skills, together with property asset management, underpins dexterity in underwriting retail assets.”

When Vukile invested in Lar España, it was trading at approximately a 48% discount to net asset value (NAV). Vukile quickly identified this investment as a tremendous opportunity because of its asset and market alignment. The investment provided strategic optionality that, in all instances, provided significant potential for capital appreciation while receiving attractive dividends. During Vukile’s time as a significant Lar España shareholder, the share’s discount to NAV reduced materially.

While Lar España shares still trade at almost 19% discount to NAV based on the increased offer price, when viewed from the perspective of the yield on Lar España’s assets, Vukile believes the negotiated offer price presents an opportunity to redeploy capital into other strategically aligned and financially accretive opportunities with potentially better yields at significantly lower operational and deal execution risk.

While some in the market may have anticipated a counterbid, having considered all options, the complexity, cost and execution risk of doing so made this a less optimal solution. “This decision reflects Vukile’s disciplined approach to capital allocation and deal-making,” notes Rapp.

The company remains committed to its growth strategy in Spain and the Iberian Peninsula, where it has established a significant presence and pipeline of opportunities. From a standing start seven years ago, Vukile has grown Castellana to become the fifth biggest retail property owner in Spain. It is set to become the third largest by the end of 2024 and is well on its way to growing the largest retail property portfolio across the Iberian Peninsula.

Vukile’s acceptance of the Lar España offer comes after it launched the natural expansion of its Spanish growth into Portugal with the pre-funded acquisition of three shopping centres, which closed earlier this week. The transaction takes Vukile’s exposure to the Iberian Peninsula to 64% of its assets.

Following its recent capital raise for several well-progressed deals that Vukile is evaluating, and given it has a significant pipeline of opportunities with a number under active consideration in both Spain and Portugal, Vukile is confident that the proceeds from the offer will be redeployed in line with its expansion strategy in these key markets.

“By accepting the Lar España offer, Vukile is realising a substantial return for shareholders while maintaining its focus on strategic growth initiatives. Vukile is well-positioned to create further value for shareholders through disciplined investment and active asset management,” concludes Rapp.